C O N T E N T S
GROUP OVERVIEW
BUSINESS REVIEW
(cid:1) Chairman’s report
(cid:1) Operations
(cid:1) Development
(cid:1) Exploration
(cid:1) Sustainability
FINANCIAL REPORT
(cid:1) Directors’ report
(cid:1) Auditor's independence declaration
(cid:1) Consolidated statement of comprehensive income
(cid:1) Consolidated balance sheet
(cid:1) Consolidated statement of changes in equity
(cid:1) Consolidated statement of cash flows
(cid:1) Notes to the consolidated financial statements
(cid:1) Directors’ declaration
(cid:1) Independent auditor’s report
SHAREHOLDER INFORMATION
CORPORATE GOVERNANCE STATEMENT
TENEMENT SCHEDULE
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14
22
26
32
33
50
52
53
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55
56
86
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A L K A N E R E S O U R C E S LT D
C O M P A N Y I N F O R M A T I O N
ACN 000 689 216 ABN 35 000 689 216
DIRECTORS
J S F Dunlop
I J Gandel
SECRETARY
K E Brown
D I Chalmers
A D Lethlean
REGISTERED OFFICE & PRINCIPAL PLACE OF BUSINESS
Ground Floor, 89 Burswood Road, Burswood WA 6100
Telephone: 61 8 9227 5677 Facsimile: 61 8 9227 8178
SHARE REGISTRY
Advanced Share Registry Limited
110 Stirling Highway, Nedlands WA 6009
Telephone: 61 8 9389 8033 Facsimile: 61 8 9262 3723
AUDITORS
PricewaterhouseCoopers
Brookfield Place, 125 St Georges Terrace, Perth WA 6000
SECURITIES EXCHANGE LISTINGS
Australian Securities Exchange (Perth)
Ordinary fully paid shares
Code: ALK
OTCMarkets – OTCQX International
American Depositary Receipts (ADR)
Code: ANLKY
Level 1 ADR Sponsor
The Bank of New York Mellon, Depositary Receipts Division
101 Barclay Street, 22W New York NY 10286
United States of America
INTERNET
Internet Home Page: http://www.alkane.com.au
E-mail address: mail@alkane.com.au
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Competent Persons
Unless otherwise advised, the information in this report that relates to exploration results,
mineral resources and ore reserves is based on information compiled by Mr D I Chalmers,
FAusIMM, FAIG, (director of the Company) who has sufficient experience which is relevant
to the style of mineralisation and type of deposit under consideration and to the activity
which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition
of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves (JORC, 2012). Ian Chalmers consents to the inclusion in this report of the
matters based on his information in the form and context in which it appears.
Tomingley Gold Project:
(cid:1) The information in this report that relates to the Mineral Resource estimates for the
Tomingley Gold Project (annual update first released to ASX on 22 September 2016)
is based on, and fairly represents, information which has been compiled by Mr Craig
Pridmore, Geology Superintendent Tomingley Gold Operations, who is a Member of the
Australasian Institute of Mining and Metallurgy and an employee of Alkane Resources
Ltd. Mr Pridmore has sufficient experience that is relevant to the style of mineralisation
and type of deposit under consideration and to the activity that is being undertaken to
qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr
Pridmore consented to the inclusion in the report of the matters based on his
information in the form and context in which they appear.
(cid:1) The information in this report that relates to the Ore Reserve estimate for the Tomingley
Gold Project (annual update first released to ASX on 22 September 2016) is based on,
and fairly represents, information which has been compiled by Mr John Millbank
(Proactive Mining Solutions), an independent consultant, who is a Member of the
Australasian Institute of Mining and Metallurgy. Mr Millbank has sufficient experience
that is relevant to the style of mineralisation and type of deposit under consideration
and to the activity that is being undertaken to qualify as a Competent Person as defined
in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’. Mr Millbank consented to the inclusion in the
report of the matters based on his information in the form and context in which they
appear.
Dubbo Zirconia Project:
(cid:1) The information in this report that relates to Mineral Resources (first released in the
2004 Annual Report) and Ore Reserves (originally released to ASX on 16 November
2011 and updated on 11 April 2013 and 30 October 2013) for the Dubbo Zirconia
Project was based upon information compiled by Mr Terry Ransted (MAusIMM), then
a principal of Multi-Metal Consultants Pty Ltd, who was a Competent Person as defined
in the 2004 edition of the ‘Australasian Code for Reporting of Exploration Results,
Minerals Resources and Ore Reserves’ (JORC, 2004) and is a Competent Person as
defined in JORC, 2012 . Mr Ransted consented to the inclusion in the report on matters
based on information compiled by him in the form and context in which it appeared.
This information was prepared and first disclosed under JORC, 2004. It has not been
updated since to comply with JORC, 2012 on the basis that the information and
underlying assumptions have not materially changed.
Disclaimer
This report contains certain forward looking statements and forecasts, including possible
or assumed reserves and resources, production levels and rates, costs, prices, future
performance or potential growth of Alkane Resources Ltd, industry growth or other trend
projections. Such statements are not a guarantee of future performance and involve
unknown risks and uncertainties, as well as other factors which are beyond the control of
Alkane Resources Ltd. Actual results and developments may differ materially from those
expressed or implied by these forward looking statements depending on a variety of
factors. Nothing in this report should be construed as either an offer to sell or a solicitation
of an offer to buy or sell securities.
This document has been prepared in accordance with the requirements of Australian
securities laws, which may differ from the requirements of United States and other country
securities laws. Unless otherwise indicated, all ore reserve and mineral resource estimates
included or incorporated by reference in this document have been, and will be, prepared in
accordance with the JORC classification system of the Australasian Institute of Mining, and
Metallurgy and Australian Institute of Geosciences.
A N N U A L R E P O R T 2 0 1 6
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G R O U P O V E R V I E W
Alkane Resources is a multi-commodity mining and exploration company with a focus on gold,
copper, zirconium, hafnium, niobium and rare earth elements.
On the journey to becoming a strategic producer of critical minerals for a range of sustainable
technologies, the Company is committed to safe environmental practices and local community
wellbeing.
2
A L K A N E R E S O U R C E S LT D
The Alkane Group’s projects and operations are located in the Central West of New South Wales
(NSW), in eastern Australia. Chief among them are the Tomingley Gold Operations, a medium-sized
gold operation near Dubbo that commenced production in February 2014, and the Dubbo Zirconia
Project, a major development scheduled to commence construction in 2017.
The Dubbo Zirconia Project will position Alkane as a strategic and significant producer of zirconium,
hafnium, niobium and rare earth products. Several other exploration projects in the region are also
being evaluated.
Alkane is committed to safe environmental practices and biodiversity improvement at all its mining
and exploration sites. The Company takes care to minimise the environmental impact of its activities,
from pre-planning and commencement, through to adopting dedicated site rehabilitation programs
upon completion.
The wellbeing of neighbouring local communities is also extremely important. The Company has been
an active and contributing member of the Central West NSW community for over 25 years, supporting
local education and training, employing locally, engaging with community activities and preferring to
purchase local products and services where practicable.
Alkane (ASX and OTCQX (US) listed) is an investment opportunity for investors seeking exposure to an
Australian company with Australian projects of international significance.
ALKANE’S PROJECT LOCATIONS IN CENTRAL WEST NEW SOUTH WALES
A N N U A L R E P O R T 2 0 1 6
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G R O U P O V E R V I E W
ZrZIRCONIUM
HfHAFNIUM
NbNIOBIUM
RARE EARTHS
MULTI-COMMODITY MINING
Alkane is currently producing gold at Tomingley Gold Operations and
developing the Dubbo Zirconia Project, which will produce zirconium,
hafnium, niobium and rare earths.
ZIRCONIUM
Zirconium is a corrosion-resistant metal used in a wide variety of
engineering, industrial and everyday applications – including the auto
exhaust catalyst, electronics, engineering and refractory ceramic, energy,
optical glass and alloys industries.
The source of zirconium at the Dubbo Zirconia Project is a hydrous
zirconium silicate mineral that offers an important new source of zirconium
materials that is unrelated to titania mineral sands operations, which have
traditionally produced zirconium materials as a valuable by-product. The
project will produce a range of particularly high-purity zirconium materials
(99.9%), owing to the recovery of hafnium from the process stream.
HAFNIUM
Hafnium is a lustrous grey metal with growing application in superalloys
used in the aerospace industry. It also has increasing use in industrial gas
turbines, plasma cutting tips, ultra-high temperature ceramics, and
advanced materials used in the microelectronics and optoelectronics
industries.
Chemically resembling zirconium, hafnium is always found in zirconium
minerals, from which it needs to be extracted using advanced metallurgical
processing. To-date, most of the world’s hafnium metal has been
produced as a by-product of the nuclear industry, which requires hafnium-
free zirconium. The Dubbo Zirconia Project represents an opportunity to
produce hafnium and high-purity zirconium materials without nuclear
industry imperatives.
NIOBIUM
Niobium is a metal with superconductive properties that is used mostly in
alloys and superalloys. It is usually sold as niobium pentoxide or
ferroniobium; niobium metal is produced in small quantities. Niobium is
used widely as an alloying element for steel turbines and other engineering
steels, magnets, glass and capacitors for electric motors and mobile
electronics.
RARE EARTH ELEMENTS
Rare earths, or rare earth elements (REEs), are a group of metallic elements
in the periodic table which have diverse chemical, electronic and magnetic
properties. These make them ideal for a range of technological and ‘green
energy’ applications.
REEs such as neodymium, praseodymium, didymium (praseodymium-
neodymium), dysprosium and terbium are in particularly high demand for
use in lightweight high-strength magnets. The Dubbo Zirconia Project will
produce a high purity rare earth chemical concentrate (95% REO), which
will be separated into high value rare earth oxides under a toll processing
agreement.
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A L K A N E R E S O U R C E S LT D
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A N N U A L R E P O R T 2 0 1 6
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C H A I R M A N ' S R E P O R T
“After receiving development consent for the Dubbo Zirconia Project in May 2015, we have
focused on fine-tuning the engineering design, acquiring licences and advancing funding to
underpin this important investment asset. Meanwhile, our plans to expand mining operations
at Tomingley have progressed, with the announcement of initial underground ore reserves and
approval for the Caloma Two open cut.”
6
A L K A N E R E S O U R C E S LT D
Welcome to the 2016 Annual Report for Alkane Resources Ltd. It has been another productive year,
with significant milestones achieved at both Tomingley Gold Operations and the Dubbo Zirconia Project.
Tomingley generated revenues of $109.1 million, a cash operating surplus of $24.6 million and a
pre-tax profit of $14.3 million, supporting an overall profit after tax for the Alkane group of $4.7 million.
TOMINGLEY GOLD OPERATIONS
Our gold operations at Tomingley, near Dubbo in Central West New South Wales, experienced an
excellent year, with both production and cost outcomes falling within guidance. A total of 67,812
ounces of gold was poured during the reporting period, which is in-line with the production estimate.
Mining activity continued in all three established pits throughout the year, with ore production
commencing in Wyoming One shortly after the Wyoming Three pit was completed. In support of our
plans to expand mining operations, we were delighted to receive approval from the NSW Department
of Planning & Environment in July 2016 for development of the Caloma Two open cut. The Company
also reported an estimated initial underground ore reserve for the Wyoming One and Caloma deposits
in December 2015. Both the Caloma Two resource and underground operations below the Wyoming
One and Caloma ore bodies are now incorporated into the life of mine schedule.
DUBBO ZIRCONIA PROJECT
Alkane’s Dubbo Zirconia Project (DZP) is expected to position the Company as a strategic and
significant world producer of zirconium, hafnium, niobium and rare earth products. After receiving
development consent in May 2015, we have focused the past year on progressing the engineering
design, acquiring licences and advancing funding to allow the Company to proceed with development
of this important investment asset.
We have now secured all required approvals and licences, including the Mining Lease and
Environment Protection Licence, as well as federal approval under the Commonwealth Environment
Protection and Biodiversity Conservation Act 1999. Following completion of the Front End
Engineering Design (FEED) by Hatch in August 2015, we have been working with Outotec under an
Early Contractor Involvement agreement to find further value in the design.
In June/July of this year, the Company completed a pro rata entitlement offer to shareholders (and
placement of shortfall from the offer), raising approximately A$16 million. These funds are to be
utilised predominantly to progress the DZP. The Toongi Pastoral Company was also established as a
wholly owned subsidiary of Alkane to manage the farming lands and Biodiversity Offset Areas.
The signing of a Letter of Intent in April 2016 with Vietnam Rare Earth JSC to toll process the DZP rare
earth concentrate into individual rare earth products was a strategic step forward for the project. The
partnership should provide an important route to market for the high-value magnet rare earth elements
produced by the DZP, and position Alkane as a significant global producer of separated rare earths and
downstream value-added products.
Finally, I am pleased to report that subsequent to the end of the financial year, the Company has
signed an exclusive worldwide marketing, sales and distribution agreement with Minchem Ltd for all
zirconium materials produced by the DZP, another strategic advance for the project.
RESOURCE DEVELOPMENT AND EXPLORATION
The Company has continued exploration activities at various projects in Central West NSW, with the view
to expanding our mining portfolio and creating future development opportunities. Notably, further
extensive gold mineralisation was identified at Bodangora in the Molong Volcanic Belt, and the Company
is stepping up the exploration effort to identify additional resources in the Tomingley Gold Project area.
I extend my personal thanks to my fellow directors, the exploration, operations and support teams, our
consultants and our many shareholders for their ongoing support of Alkane.
John S F Dunlop
Chairman
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A N N U A L R E P O R T 2 0 1 6
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O P E R A T I O N S
Another excellent year for Tomingley Gold Operations saw ore production commence in
the Wyoming One deposit, release of the first underground ore reserve estimates, and
development approval for the Caloma Two open pit.
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A L K A N E R E S O U R C E S LT D
TOMINGLEY GOLD OPERATIONS
The gold operations at Tomingley are based on four gold deposits (Wyoming One, Wyoming Three,
Caloma and Caloma Two) totalling 687,000 ounces, located approximately 50 kilometres south-west
of Dubbo in Central West NSW. Underground operations below the Wyoming One and Caloma ore
bodies are now incorporated into the life of mine schedule (which extends six years from now).
Operated by Tomingley Gold Operations Pty Ltd (TGO), a wholly owned subsidiary of Alkane,
Tomingley gold mine was commissioned in January 2014 and has been operating at the design
capacity of 1Mtpa since late May 2014.
The 2016 financial year was excellent for TGO, with both production and cost outcomes falling within
the original full year guidance issued over a year ago. Mining activity took place in three pits, with ore
production commencing in Wyoming One shortly after the Wyoming Three pit was completed. Ore
reconciliations remain in line with updated resource modelling and gold poured was in line with the
production estimate.
MINING AND PROCESSING
Mining activity in the 2016 reporting period occurred in all three of the site’s active pits – Caloma,
Wyoming One and Wyoming Three. After waste stripping activity in Wyoming One during the first two
quarters, mining of ore commenced in the March quarter and volumes increased over the period. Ore
production continued in the Caloma pit for the entire reporting period, whereas the Wyoming Three pit
was completed in the December 2015 quarter, and is now being used for water storage. In July 2016,
the NSW Department of Planning & Environment granted approval for development of the Caloma Two
open cut, which is expected to commence in the December 2016 quarter.
The Company reported an estimated initial underground ore reserve for the Wyoming One and Caloma
deposits in December 2015. The mining assessment indicated that ore production would commence
nine months after the start of development of a portal in the Caloma open pit and continue for 33
months (2.75 years). During this production period, it is anticipated that the high-grade underground
ore would be blended with stockpiled low-grade ore from the open pits, and used to supplement open
pit mill feed to maintain a consistent ore throughput and feed grade.
Since reaching design capacity in May 2014, TGO continues to operate at the 1Mtpa rate.
Unseasonably high rainfall in the June 2016 quarter resulted in a temporary reduction in overall
material movements; however, mining productivity remained high and overall total costs met forecast.
Overall ore reconciliation for the reporting period fell in line with resource model predictions – taking
into account the Caloma model was revised for the presence of cross cutting unmineralised dolerite
dykes. Over its life, the Wyoming Three pit yielded 40% more ounces than modelled.
Despite heavy rainfall events in May and June, gold poured for the year totalled 67,812 ounces, within
the predicted 60,000 – 70,000 ounces. Production for the 2017 financial year is estimated to be
65,000 – 72,000 ounces.
KEY PROJECT MILESTONES (2015-2016)
(cid:1) Gold poured 67,812 ounces
(cid:1) Full year sales of 67,893 ounces
(cid:1) Revenues of $109.1M and operating cash flow of $24.6 million
(cid:1) Wyoming Three completed October 2015
(cid:1) Ore production commenced Wyoming One in March 2016 quarter
(cid:1) Initial underground ore reserves released December 2015
(cid:1) Approval for development of Caloma Two pit received in July 2016
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O P E R A T I O N S CONTINUED
Other works carried out at TGO during the reporting period include scheduled maintenance refurbishments of the leach tanks, a scheduled wall lift of the site’s
residue (tailings) storage facility, and the commencement of rehabilitation of the outer faces of the waste rock emplacements.
To conclude the matter of the prosecution brought against TGO by the NSW Environment Protection Authority (EPA), following two minor environmental
incidents in 2014, the Company pleaded guilty in May 2015 and was fined $95,000 in October 2015. TGO reported the incidents when they occurred (March
– June 2014) and took full responsibility. The incidents involved water runoff from the site’s earthworks due to extremely heavy downpour and subsequent
deposit of topsoil on the Newell Highway and an adjacent property. No chemicals were involved and there has been no evidence of environmental damage.
TGO has implemented changes to minimise the chances of this type of incident recurring.
TGO PRODUCTION FIGURES BY QUARTER
SEPT QUARTER
2015
DEC QUARTER
2015
MARCH QUARTER
2016
JUNE QUARTER
2016
FY 2016
TGO Production
Waste mined
Ore mined
Strip Ratio
Grade
Ore milled
Head grade
Recovery
Gold poured
Revenue Summary
Gold sold
Average price realised
Gold revenue
Cost Summary
Mining
Processing
Site Support
C1 Site Cash Cost
Royalties
Sustaining capital
Rehabilitation
Corporate
AISC1
Stockpiles
Ore for immediate milling
Grade
Contained gold
BCM
Tonnes
Ratio
g/t
Tonnes
g/t
%
Ounces
Ounces
A$/oz
A$M
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
Tonnes
g/t
Ounces
1,676,850
433,744
10.6
1.87
271,980
2.44
92.6
19,789
21,000
1,565
32.9
784
242
78
1,104
46
36
16
32
1,234
678,681
0.95
20,735
1,447,753
277,061
14.4
1.84
257,998
1.93
91.4
15,347
14,250
1,583
22.6
731
322
113
1,166
43
44
20
43
1,316
698,744
0.94
21,155
1,839,737
198,877
23.6
1.93
270,155
2.02
89.5
14,612
15,000
1,621
24.3
774
361
114
1,249
45
1
22
41
1,358
618,218
0.80
15,914
1,235,480
375,772
7.2
1.75
295,972
1.94
90.5
18,064
17,733
1,658
29.4
659
266
84
1,009
51
39
15
35
1,149
701,047
0.82
18,480
6,199,820
1,285,454
12.2
1.84
1,096,105
2.08
90.9
67,812
67,983
1,605
109.1
736
292
96
1,124
46
31
18
37
1,256
701,047
0.82
18,480
1.
AISC = All in Sustaining Cost comprises all site operating costs, royalties, mine exploration, sustaining capex, mine development and an allocation of corporate costs, on the
basis of ounces produced. AISC does not include share based payments or net realisable value provision for ore inventory.
COSTS AND FINANCING
The average All In Sustaining Cost (AISC) for the 2016 financial year was A$1,256 per ounce produced. This is higher than the anticipated long-term life-of-
mine AISC of A$1,000 – 1,100/oz due to waste stripping in the Wyoming One pit. Persistent rainfall events continue to impact production; however, subject
to modifying weather conditions, 2017 financial year production is estimated to be 65,000 – 72,000oz with an AISC range of A$1,200 – 1,300/oz. The key
variables will be performance at the Caloma pit and timing of high grade ore releases from Wyoming One.
A total of 67,983 ounces of gold were sold in the 2016 financial year at an average realised price of A$1,605, generating revenue of A$109.1 million and an
operating cash flow of A$24.6 million. The Company maintains a hedging program to provide a level of protection against any short term gold price
weakness, and at 30 June 2016, A$ gold forward contracts were in place for 63,900 ounces at an average forward price of $1,690 per ounce.
TGO has entered into a working capital facility for A$14 million with Macquarie Bank Limited to facilitate progressing the development of underground
operations and exploration activities with a view to extending mine life. Prior to this, the TGO development was fully funded by Alkane without any borrowings
or debt, and the group retains a low level of leveraging after this financing. Excess funds generated by TGO during the reporting period were applied to the
activities underpinning continuing evaluation and development of the Dubbo Zirconia Project.
10
A L K A N E R E S O U R C E S LT D
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MAP OF TGO UNDERGROUND TARGET ZONES
TOMINGLEY GOLD OPERATIONS – SITE LAYOUT
A N N U A L R E P O R T 2 0 1 6
11
O P E R A T I O N S CONTINUED
MINERAL RESOURCES AND ORE RESERVES
The Company reports ore reserves and mineral resources for the Tomingley Gold Operations as at 30 June 2016 in accordance with the 2012 edition of the
Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC 2012).
These estimates take into account ore depleted by mining during the 2016 financial year and were reported to the ASX on 22 September 2016.
MINERAL RESOURCES
The reportable mineral resources for TGO incorporate both open pittable and underground resources for the four deposits (Wyoming One, Wyoming Three,
Caloma and Caloma Two) associated with TGO. These mineral resources are wholly inclusive of ore reserves. Full details are given in the ASX release of 22
September 2016.
TOMINGLEY GOLD PROJECT MINERAL RESOURCES (AS AT 30 JUNE 2016)
DEPOSIT
MEASURED
INDICATED
INFERRED
TOTAL
TOTAL GOLD
TONNAGE
GRADE
TONNAGE
GRADE
TONNAGE
GRADE
TONNAGE
GRADE
(Kt)
(g/t Au)
(Kt)
(g/t Au)
(Kt)
(g/t Au)
(Kt)
(g/t Au)
(Koz)
Open Pittable Resources
(cut off 0.50g/t Au)
Wyoming One
Wyoming Three
Caloma
Caloma Two
Stockpiles
Sub Total
Underground Resources
(cut off 2.50g/t Au)
Wyoming One
Wyoming Three
Caloma
Caloma Two
Sub Total
TOTAL
1,980
86
604
1.7
2.0
1.3
416
16
1,892
1,085
1.6
1.3
1.4
2.4
671
33
1,204
704
1.1
1.4
1.4
1.3
2,670
1.6
3,409
1.7
2,612
1.3
169
10
179
2,849
4.8
3.6
4.7
1.8
206
6
1
92
305
3,714
4.4
3.1
2.9
3.5
4.1
1.9
363
4
18
63
448
3,060
4.2
3.1
2.9
3.2
4.0
1.7
3,067
135
3,700
1,789
701
9,392
738
20
19
155
932
10,324
1.6
1.7
1.4
2.0
0.8
1.5
4.4
3.4
2.9
3.3
4.2
1.8
153
8
163
112
18
454
104
2
2
17
125
579
*
apparent arithmetic inconsistencies are due to rounding
12
A L K A N E R E S O U R C E S LT D
ORE RESERVES
In December 2015, the Company released details of an initial estimated underground ore reserve for the Wyoming One and Caloma deposits (ASX
announcements 10 and 18 December 2015 – the Company confirms that all material assumptions and technical parameters underpinning this reserve
continue to apply and have not materially changed). These underground ore reserves are in addition to the open pit reserves previously reported. The
following table lays out the total reportable ore reserves for TGO. Full details are given in the ASX release of 22 September 2016.
TOMINGLEY GOLD PROJECT ORE RESERVES (AS AT 30 JUNE 2016)
DEPOSIT
PROVED
PROBABLE
TOTAL
TOTAL GOLD
Open Pittable Reserves (cut off 0.50g/t Au)
Wyoming One
Wyoming Three
Caloma
Caloma Cut Back
Caloma Two
Stockpiles
Sub Total
Underground Reserves (cut off 2.50g/t Au)
Wyoming One
Sub Total
TOTAL
*
apparent arithmetic inconsistencies are due to rounding
TONNAGE
(Kt)
GRADE
(g/t Au)
TONNAGE
(Kt)
GRADE
(g/t Au)
TONNAGE
(Kt)
GRADE
(g/t Au)
1,297
0
116
233
-
701
2,347
224
224
2,571
1.7
0
1.7
1.4
-
0.8
1.4
4.0
4.0
1.6
150
0
722
251
318
-
1,441
301
301
1,742
1.5
0
1.6
1.1
3.2
-
1.9
3.4
3.4
2.2
1,447
0
838
484
318
701
3,788
524
524
4,312
1.6
0
1.6
1.2
3.2
0.8
1.5
3.7
3.7
1.8
(Koz)
78
0
43
19
33
18
191
62
62
253
COMPARISON OF 2015 / 2016 MINERAL RESOURCES AND ORE RESERVES
The table below compares the resources and reserves year on year with 2015 as per the current reporting requirements.
DEPOSIT
TOTAL RESOURCES
TOTAL RESERVES
2015
2016
2015
2016
TONNAGE
GRADE
GOLD
TONNAGE
GRADE
GOLD
TONNAGE
GRADE
GOLD
TONNAGE
GRADE
GOLD
(Kt)
(g/t Au)
(koz)
(Kt)
(g/t Au)
(koz)
(Kt)
(g/t Au)
(koz)
(Kt)
(g/t Au)
(koz)
Wyoming One
Wyoming Three
Caloma
Caloma Cutback
Caloma Two
Stockpiles
Underground
TOTAL
4,083
387
4,837
1,944
468
2.1
2
1.7
2.1
0.8
271
24
263
129
12
11,719
1.9
699
* apparent arithmetic inconsistencies are due to rounding
The primary differences from 2015 to 2016 are:
153
8
163
3,067
135
3,700
1.6
1.7
1.4
Caloma cutback included in Caloma
2.0
0.8
4.2
1.8
1,789
701
932
10,324
112
18
125
579
1,867
178
1,319
288
243
468
1.5
1.5
1.9
1.4
3.5
0.8
94
9
80
14
27
12
4,363
1.6
236
1,447
0
838
484
318
701
524
4,312
1.6
0.0
1.6
1.2
3.2
0.8
3.7
1.8
78
0
43
19
33
18
62
253
(cid:1) Ore mined from Caloma, Wyoming Three and Wyoming One during the period
(cid:1) Inclusion of maiden underground reserve
(cid:1) Caloma reserves used an updated geological/structural model based on in-pit mapping and grade control drilling, as well revised geotechnical
parameters
(cid:1) Caloma Two reserve based on new pit design
(cid:1) Wyoming One reserve based on new pit design
A N N U A L R E P O R T 2 0 1 6
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D E V E L O P M E N T
With all government approvals and licences now in place, the Dubbo Zirconia Project is now
ready for detailed design and construction to commence, contingent on financing. Land
acquisitions were finalised in June 2016, and for much of the year the Company has been
working with a global minerals and metals technology supplier to find further value in the
design and reduce the project’s overall cost.
14
A L K A N E R E S O U R C E S LT D
DUBBO ZIRCONIA PROJECT
The Dubbo Zirconia Project (DZP) is based on large in-ground resources of zirconium, hafnium,
niobium, yttrium and rare earth elements, making it a potential strategic supply of critical minerals for
a range of ‘high-tech’ and sustainable technologies. It is the most advanced project of its kind outside
China, and the products of the DZP are considered both ‘strategic’ and ‘critical’ by global markets, due
to their economic importance and supply risk.
This unique ore body, which has a potential mine life of 70+ years, is located at Toongi, 25
kilometres south of the large regional centre of Dubbo in Central West NSW. It is being developed by
Australian Zirconia Limited (AZL), a wholly owned subsidiary of Alkane.
PROJECT DEVELOPMENT MILESTONES
APPROVALS AND LICENCES
All NSW State Government and Australian Federal Government approvals for the development of the
DZP are now in place. Following final development approval from the NSW Department of Planning and
Environment (DPE) on 28 May 2015, the DZP received federal approval under the Commonwealth
Environment Protection and Biodiversity Conservation Act 1999 on 24 August 2015. The Mining Lease
for DZP was granted by the NSW Department of Industry, Division of Resources and Energy on 18
December 2015. Mining Lease 1724 covers 2,390 hectares and includes the operating site, significant
Biodiversity Offset Areas and residual agricultural land. The Environment Protection Licence (EPL) was
granted on 14 March 2016.
LAND ACQUISITION
The final land acquisitions covering the project area were completed during the June quarter. The
Company owns about 3,441 hectares around the project site, of which 520Ha is required for mining
and processing operations, 1,021Ha is allocated to Biodiversity Offset Areas, with the remaining
1,900Ha to be retained for farming. To manage the farming lands and Biodiversity Offset Areas,
Toongi Pastoral Company Pty Ltd (TPC) has been established and a professional manager engaged to
oversee these operations. A comprehensive business plan is being developed for TPC to be a
self‐sustaining and profitable agricultural enterprise.
KEY PROJECT MILESTONES (2015-2016)
(cid:1) Front End Engineering Design (FEED) completed in August 2015
delivering a completed capital cost estimate of A$1.3B
at an accuracy of ±15%
(cid:1) Federal approval under the Commonwealth Environment Protection
and Biodiversity Conservation Act 1999 received 24 August 2015
(cid:1) Early Contractor Involvement agreement signed with Outotec in
September 2015
(cid:1) Mining Lease 1724 granted 18 December 2015
(cid:1) Environment Protection Licence granted
14 March 2016
(cid:1) Rare earths toll processing Letter of Intent signed with VTRE in April
2016
(cid:1) Final land acquisitions completed in June 2016 and Toongi Pastoral
Company established
(cid:1) Global marketing, sales and distribution agreement signed with
Minchem in August 2016
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A N N U A L R E P O R T 2 0 1 6
15
D E V E L O P M E N T CONTINUED
FINANCING
On 26 April 2016 the Company announced a one for five share entitlement offer to all eligible shareholders at a price of A$0.20 to raise about A$16 million.
Approximately 75% of the offer was taken up by existing shareholders and the shortfall was placed (at the same issue price) to institutional and professional
investors. Total funds raised of $16.5 million, less the costs of the issue, are to be applied predominantly to DZP related expenditures, including land
acquisitions, further pilot plant tests, and development of strategic partnerships.
AZL continues to work with its advisors to progress full funding of the project. The broad strategy has not changed, with strategic investment, Export Credit
Agency finance and commercial debt remaining as the key components of the envisaged project funding suite. The next key step in the full financing program
is customer confirmation of products certification and committed off‐take agreements that will underpin the financial model.
ENGINEERING AND COSTS
The Front End Engineering Design (FEED) study for the DZP was completed by Hatch Pty Ltd in August 2015. The FEED included a completed capital cost
estimate to bring the project into operation of A$1.3B (US$0.97B) at an accuracy of ±15%, including a contingency of A$103M (8%). The estimate was
prepared on an Engineering, Procurement and Construction Management (EPCM) basis, and contained firm pricing for most of the packages from the
marketplace.
Following the FEED study and analysis of other factors, AZL estimated DZP steady state operating costs to be A$260 million per annum, generating an average
EBITDA of A$320M per year, a 20-year net present value (NPV) of A$1.22B (discount rate of 8% and pre‐tax) and an internal rate of return (IRR) of 17.5%.
This indicates an overall cost to produce a kilogram of any product would be in the range US$7.50 to US$8.00/kg with revenue averaging US$17.00/kg.
Several significant process improvements resulted from the FEED study – including improvements for water management and waste treatment, as well as a
revamped rare earth circuit to improve recoveries. Projected water consumption was reduced from 4 gigalitres per annum to 2Glpa, and the site footprint
halved to 520 hectares. The design was also modified to provide closer integration and/or more tailored products to downstream customers and toll treatment
partners.
To find further value in the design and reduce the project’s overall cost, the Company signed an Early Contractor Involvement (ECI) agreement with global
minerals and metals technology supplier, Outotec Pty Ltd, in September 2015. Discussion with Outotec has focused on equipment supply, technology
application and construction methodology. After the initial phase of the ECI, the intention remains for Outotec to execute the process plant part of the scope
for AZL on an Engineering, Procurement and Construction (EPC) basis. This has the advantage of developing a key technology and support relationship, as
well as capping the execution risk for AZL.
The project is now ready for detailed design and construction to commence, contingent on financing. The first stage of construction will involve the detailed
design of the processing facility, followed by establishment of site infrastructure (water supply, power line construction, road works) and site earthworks.
Construction of the processing plant is expected to occur over a 24 month period.
16
A L K A N E R E S O U R C E S LT D
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DUBBO ZIRCONIA PROJECT – PROPOSED SITE LAYOUT
A N N U A L R E P O R T 2 0 1 6
17
D E V E L O P M E N T CONTINUED
MINERAL RESOURCES AND ORE RESERVES
DUBBO ZIRCONIA PROJECT MINERAL RESOURCES
Toongi
Deposit
Measured
Inferred
Total
Tonnage
(Mt)
35.70
37.50
73.20
ZrO2
(%)
1.96
1.96
1.96
The full details of methodology were given in the 2004 Annual Report.
DUBBO ZIRCONIA PROJECT ORE RESERVES
Toongi
Deposit
Proved
Probable
Total
Tonnage
(Mt)
8.07
27.86
35.93
ZrO2
(%)
1.91
1.93
1.93
HfO2
(%)
0.04
0.04
0.04
HfO2
(%)
0.04
0.04
0.04
Nb2O5
(%)
0.46
0.46
0.46
Nb2O5
(%)
0.46
0.46
0.46
Ta2O5
(%)
0.03
0.03
0.03
Ta2O5
(%)
0.03
0.03
0.03
Y2O3
(%)
0.14
0.14
0.14
Y2O3
(%)
0.14
0.14
0.14
REO
(%)
0.75
0.75
0.75
REO
(%)
0.75
0.74
0.74
The full details of methodology were given in the ASX announcement of 16 November 2011
Note: ASX announcements 16 November 2011, 11 April 2013 and 30 October 2013 – The Company confirms that all material assumptions and technical parameters underpinning
the estimated Mineral Resources and Ore Reserves, and production targets and the forecast financial information as disclosed, continue to apply and have not materially changed. This
was also confirmed with the completion of the front end engineering design (FEED) reported in the ASX announcement 27 August 2015.
18
A L K A N E R E S O U R C E S LT D
PROCESS AND PRODUCT DEVELOPMENT
Over many years, the Company has developed a flow sheet consisting of sulphuric acid leach followed by solvent extraction recovery and refining to produce
several products, including high purity zirconium, niobium, rare earth, and more recently hafnium products.
Alkane has been working with the Australian Nuclear Science and Technology Organisation (ANSTO) since 2006. A demonstration pilot plant (DPP), located
at ANSTO Minerals’ Lucas Heights facility in Sydney since 2008, has proved the project’s technical viability and provided material for market assessment.
Operation of the DPP has also informed the feasibility studies for capital and operating cost estimates.
A new series of DPP trials to assist with further product refinement, confirmation of recent laboratory test results, and production of hafnium, zirconium and
rare earth concentrates for customer evaluation commenced in August 2016.
HAFNIUM AND ZIRCONIUM
In 2015, the Company developed a process pathway to recover hafnium from the zirconium circuit as an additional product for the DZP. An extended test
program commenced at ANSTO during the September 2015 quarter, successfully producing a hafnium concentrate from a mini pilot plant.
Further development work on the hafnium and zirconium circuit helped improve understanding of the flow sheet and identify the specifications of the final
hafnium concentrate and the zirconium ‘strip liquor’ that is converted to downstream zirconium chemicals and zirconium dioxide. The removal of hafnium
(along with other impurities) from the zirconium stream has resulted in much higher-quality and higher-purity zirconium products.
Inclusion of the hafnium circuit has little impact on the existing flow sheet, and has added significant value to the project.
DUBBO ZIRCONIA PROJECT – FLOW SHEET
A N N U A L R E P O R T 2 0 1 6
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D E V E L O P M E N T CONTINUED
PROJECTED TONNAGES BASED ON RECOVERIES DEVELOPED FROM MASS BALANCES OF THE DEMONSTRATION PILOT PLANT
PRODUCT OUTPUT
RARE EARTH OUTPUT
MARKETING
Discussions with key customers and stakeholders for DZP products continued throughout the year, with a high level of interest shown in the recent process
improvements and the additional information provided in the Front End Engineering Design (FEED). In addition to meetings with several leading international
companies in Australia, dedicated visits were made to prospective customers in Europe, North America and Asia, to discuss the various product outputs from
the DZP.
The Company presented at a number of international conferences and congresses focused on rare earths and zirconium materials, including the Netherlands
(MMTA annual conference), Canada, Singapore and China. During early August 2016, AZL attended the Baotou Rare Earth Conference in China. This premier
rare earths conference is run by the government and is only open to foreign participants every four years by invitation.
The importance of the DZP as a new long-term secure source of critical metals and oxides, that will diversify global supply, continues to gain recognition and
support from companies and governments seeking to reduce dependence on current sources, particularly China. Although many of the product prices are at
four year lows, the diverse spread of output by the DZP enables a robust revenue stream to be determined as the project ramps up and the specialty metal
market stabilises. The Company has joined the London-based Minor Metal Trade Association (MMTA) to assist with market recognition of the DZP’s output.
ZIRCONIUM MARKETING AND SALES AGREEMENT
In August 2016, AZL signed an exclusive worldwide marketing, sales and distribution agreement with UK-based Minchem Ltd for all zirconium materials
produced by the DZP. Minchem is a technical ceramics marketing and manufacturing business that has been involved in zirconium chemicals and zirconium
dioxide products for over 40 years.
The initial term of the agreement is for five years from commencement of DZP production, with an option to extend for a further five years by mutual
agreement. It provides AZL with an experienced partner to market DZP zirconium products directly to key end users in all major markets, and will also assist
in the creation of higher value zirconium products.
20
A L K A N E R E S O U R C E S LT D
RARE EARTH ELEMENTS TOLL PROCESSING
In April 2016, AZL signed a Letter of Intent (LOI) with advanced chemical and materials company, Vietnam Rare Earth JSC (VTRE), to toll process the DZP rare
earth concentrate into individual rare earth products. The LOI states that AZL will have an exclusive right for 12 months to complete due diligence and for the
parties to finalise the terms of the agreement, including the option to purchase equity in VTRE. VTRE’s facilities are located near Hanoi and have full
regulatory approvals for operations and environmental management.
The partnership will allow AZL to provide a supply (alternative to that from China) of separated rare earth products, guaranteeing certification and supply chain
traceability from ore mined and processed in Australia through to customers’ products. It will also allow AZL to participate in downstream markets and capture
further value-adding for its rare earth products. VTRE’s rare earths operating costs are similar to or lower than in China, which will ensure that AZL’s
production costs will be world competitive. An AZL/VTRE joint marketing company is planned as the vehicle to market VTRE’s currently produced rare earths
and associated downstream products.
PRODUCT MARKETS
The markets for all DZP products have remained generally flat over the past year, largely due to over-supply and high operating costs in China, which is
responsible for 80% or more of global rare earths and zirconium production. However, an important recent development is the Chinese Government’s drive to
improve the efficiency, profitability and long-term sustainability of the industry, by targeting capacity reduction (to remove over-supply), consolidation and
technology innovation. Successful restructuring of the market will have significant flow-on benefits for products from the DZP sold in export markets and into
China.
ZIRCONIUM
The zirconium market remains flat, with a downward bias on zircon (zirconium silicate). Zircon is the key raw material for most zirconium products, including
zirconium oxychloride (ZOC), from which downstream zirconium chemicals are produced. The zirconium chemicals market segment retains the best outlook
for growth and development in coming years, owing to the high growth rates (5-10%) for some advanced technologies, such as automotive catalysts for
pollution control. DZP products will provide a potential new source for many common zirconium chemicals products on the global market.
RARE EARTH ELEMENTS
Despite a generally weak rare earths market, the demand for magnet rare earths (praseodymium, neodymium, mixed praseodymium-neodymium, dysprosium
and terbium) remains strong. The Industrial Mineral Company of Australia (IMCOA) estimates this sector is responsible for over 30% of all rare earths
demand, and forecasts a growth rate of 6-8% per year over the next several years.
FERRO-NIOBIUM
The niobium market remains flat, but is holding up better than most other minor metals markets due to the support and concentration of the three main
producers. High strength low alloy steel (HSLA) is the main application for ferro-niobium, which will be produced by the DZP joint venture with Treibacher
Industrie AG. AZL will be the sole producer of FeNb in Australia.
HAFNIUM
The demand for hafnium continues to exceed supply – primarily due to the current linkage with the nuclear industry and the production of hafnium-free
zirconium metal, for which there is weak demand. As a result, spot hafnium prices have almost doubled in the last three years. This underlines the
importance of having a new source of hafnium that is independent of the nuclear industry, as its use in high-temperature aerospace superalloys and
microelectronics increases. Hafnium from the DZP stands to become a major supply source to meet current and future needs.
DZP REVENUE SPLIT
Revenue from other rare earths makes up the balance
A N N U A L R E P O R T 2 0 1 6
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The Company has continued exploration activities at various projects in Central West NSW.
Notably, further extensive gold mineralisation was identified at Bodangora in the Molong
Volcanic Belt, and the Company is stepping up the exploration effort to identify additional
resources in the Tomingley Gold Project area.
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TOMINGLEY GOLD PROJECT (INCLUDING PEAK HILL GOLD MINE) (AU)
The Company is stepping up the exploration effort to identify additional resources in the Tomingley
Gold Project area, with an extensive air core drilling program scheduled for later in 2016. Limited RC
and core drilling is underway, assessing underground ore targets below the Caloma and Wyoming One
open pits (part of Tomingley Gold Operations).
NORTHERN MOLONG BELT PORPHYRY PROJECT (CU-AU) (BODANGORA,
KAISER & FINNS CROSSING)
This large project area is centred about 20 kilometres north of Wellington, and about 35 kilometres
east of Dubbo. The tenements include part of the northern end of the Ordovician-aged Molong
Volcanic Belt, which is highly prospective for alkali porphyry related mineralisation similar to the Cadia
Valley deposits near Orange.
In December 2015, Alkane exercised its right under the sale and purchase agreement with Ajax Joinery
Pty Ltd (Ajax) and completed the purchase of a 100% interest in the small Kaiser tenement, EL6209.
Ajax retains a 2% net smelter royalty over any production from within the licence area.
Earlier work by Alkane and others has identified four monzonitic intrusive complexes within the
tenements. Recent detailed structural and geochemical analysis of available surface outcrops and
drilling samples has identified a stratigraphic sequence with distinct petrological and geochemical
similarities to the rocks which host the Cadia Valley deposits.
During the year, an induced polarisation (IP) survey identified a distinct chargeability feature adjacent
to the Driel Creek intrusive complex, a position that is analogous to the Ridgeway deposit within Cadia
Valley. Reconnaissance RC drilling of this chargeability anomaly will be undertaken in the second half
of 2016. A limited RC drilling program of seven holes (totalling 1,761 metres) was also completed,
testing targets within and adjacent to the Kaiser intrusive complex. A zone of alteration with
significantly elevated gold ± copper (e.g. KSRC018: 311 metres, grading 0.28g/t gold and 0.06%
copper from 19 metres; and KSRC013: 111 metres, grading 0.61g/t gold and 0.08% copper from 42
metres) was identified over a strike length of 1,500 metres. Detailed results of this program were
announced to the ASX on 6 May 2016.
WELLINGTON (CU-AU)
The Wellington Project hosts Galwadgere, a small copper-gold deposit with volcanogenic massive
sulphide-type characteristics.
During the year, an induced polarisation (IP) survey was completed to assess the potential extensions
of the Galwadgere deposit to the south. Mapping and sampling of Silurian volcanics associated with
IP chargeability features to the south east of Galwadgere returned results that require further follow up.
ELSIENORA (AU – BASE METALS)
Under the terms of the agreement with Balamara Resources Ltd, the Company has earned an 80%
interest in the Elsienora Project, following the expenditure of $500,000 on exploration. The tenements
are located 75km south of Blayney and are considered prospective for orogenic style gold
mineralisation and volcanic hosted gold and base metal mineralisation. In the 2016 reporting period,
an RC drilling program of 14 holes (totalling 1,594 metres) was completed, testing the strike
extensions of the Cuddyong Prospect. The full results were announced to the ASX on 6 May 2016.
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E X P L O R A T I O N CONTINUED
ROCKLEY (AU)
The Rockley Project, located 35km south-east of Blayney, is considered prospective for McPhillamys style gold mineralisation. No exploration activity took
place during the year.
CUDAL (AU-ZN)
Cudal is located 20km north-west of the Cadia Valley Operations of Newcrest Mining Ltd. No exploration activity took place here in the 2016 financial year,
while joint venture discussions have been held with third parties.
ORANGE EAST PROJECT (AU-CU)
In keeping with the Company’s philosophy of continually reviewing and refreshing its exploration portfolio, a number of exploration opportunities were
assessed during the year and in December 2015 the Company came to agreement with Clancy Exploration Limited (ASX code: CLY) to farm-in to the Orange
East Project area. Under the terms of the agreement, Alkane can earn an initial 60% interest in the project by spending $500,000 on exploration over three
years, and can elect to earn a further 20% by spending an additional $500,000 over an additional three year period.
The Orange East Project is located approximately 15km east-south-east of Orange and consists of one exploration licence covering approximately 45 square
kilometres. The project area hosts the historic Carangara copper workings at Byng (1850 to 1875); however, the most compelling exploration target is at the
Gunnarbee prospect, where a multi-element soil geochemical anomaly, with a similar elemental suite to the surface anomaly at McPhillamys, has been
outlined over an area of 1000m by 500m.
The exploration licence was approved on 11 May 2016 and land access negotiations will commence as soon as practicable. Alkane’s initial approach will be
to complete soil geochemistry and ground geophysics in areas currently not covered. Drilling of highest priority targets will be undertaken once these surveys
have been completed and land access has been granted.
LEINSTER REGION JOINT VENTURE (NI-AU)
Alkane has a diluting 19.4% interest in this Western Australian nickel-gold exploration venture (Miranda and McDonough Prospects). The remaining share is
now held by Australian Nickel Investments Pty Ltd (ANI, a subsidiary of Western Areas Ltd), following its acquisition from Xstrata Nickel Australasia in the
September 2015 quarter. ANI completed additional ground EM surveys and has scheduled drill testing some of the targets generated.
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S U S T A I N A B I L I T Y
Alkane Resources strives to deliver leading-practice environmental and social performance in
all that we do.
The Company is keen to assist regional communities to flourish and become more resilient,
and to provide a safe and rewarding working environment for employees. We are committed
to safe environmental practices and to the delivery of biodiversity improvement at all our
mining and exploration sites.
Our aim is to leave a positive legacy for local communities and the land alike, that long
outlasts the life of our activities in the region.
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ENVIRONMENTAL MANAGEMENT
Alkane seeks to minimise its environmental footprint at all its mining and exploration sites and restore
those sites to be non-polluting and productive.
We work hard to protect the wide variety of native species that live in our mining areas. Our aim is to
leave our mining sites as stable functioning ecosystems despite the inevitable change in land form.
This is achievable through careful design, creation of Biodiversity Offset Areas, progressive
rehabilitation, monitoring and management actions.
The process commences when we start preparing land for a mining project – before any soil is turned
– and includes the restoration and planting of new native habitats for animal species, especially those
which are threatened and endangered, along with other measures to encourage biodiversity in the
areas we are mining. After the mining process is over, mine infrastructure is removed and the final
landform is rehabilitated to be left in a long-term stable condition.
TOMINGLEY GOLD OPERATIONS
Currently the Company’s only operating mine, Tomingley Gold Operations possesses all the required
approvals and licences for its mining and processing operations, including the Environment Protection
Licence issued in 2013.
An effective cyanide destruction circuit, consistent with the International Cyanide Code, is incorporated
into the gold processing plant, ensuring the site’s residue storage facility is safe for local wildlife.
TGO also complies with leading practice for water recycling and residue management and is
undertaking progressive rehabilitation of the site’s waste rock emplacements. This involves
stabilisation of the outside batters (or walls) of earth and rock, and seeding of pasture species that are
consistent with the Tomingley area.
The TGO site also includes 121.6Ha of Biodiversity Offset Areas, which are protected by a
Conservation Property Vegetation Plan signed in agreement with Local Land Services. As part of these
biodiversity offsets, the seeds from native grey box (eucalyptus) trees were harvested and used to
directly seed 35Ha of native woodland. A further 6000 trees and shrubs have been planted around the
site in the past couple of years.
DUBBO ZIRCONIA PROJECT
Alkane’s Dubbo Zirconia Project is expected to commence construction in the 2017 financial year.
Following rigorous assessment of the Environment Impact Statement, development approval was
granted by the NSW Planning Assessment Commission in May 2015. The Mining Lease was
subsequently granted by the NSW Department of Industry, Resources and Energy on 18 December
2015, and the Environment Protection Licence granted by the NSW Environment Protection Authority
on 14 March 2016.
Although the DZP plant design is still being finalised, the Front End Engineering Design (FEED),
released in August 2015, incorporated improvements that will lead to environmental benefits. Primary
among these is an advanced water recovery circuit that essentially halves both the projected water
consumption (now 2Glpa) and the site footprint (now around 520Ha).
Conservation of the Pink-tailed Worm-lizard
Owing to the presence of a vulnerable species living on the DZP ore body, Alkane is now playing an
active role in the conservation of the Pink-tailed Worm-lizard (PTWL). This species is listed as
vulnerable under the Threatened Species Conservation Act 1995 and the Environment Protection and
Biodiversity Conservation Act 1999 (EPBC).
Alkane has prepared a management plan and budgeted actions to provide increased protection of this
species on Company-owned land. The PTWL has been found on five additional outcrops contained
within the DZP Biodiversity Offset Areas; these areas will be protected in perpetuity under a covenant
and habitat will be enhanced to encourage PTWL colonisation of areas away from proposed
operations.
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S U S T A I N A B I L I T Y CONTINUED
On 24 August 2015, the Company received notification of approval under the EPBC of the proposed mining of the Toongi deposit. The Company was also
named winner of the Environment Excellence award at the NSW Mining 2015 Health, Safety, Environment and Community Awards for its efforts to conserve
the PTWL.
Establishment of the Toongi Pastoral Company
Of the aggregated 3,441Ha of land associated with the project, the DZP mining and processing footprint will be 520Ha. To oversee management of the
remaining freehold and leasehold land and property assets, including 1,021Ha of biodiversity offsets and 1,900Ha of agricultural land, Alkane has established
the Toongi Pastoral Company Pty Ltd (TPC) as a wholly owned subsidiary.
The Biodiversity Offset Areas feature grassy white box woodlands, Wiradjuri cultural heritage sites and habitats for the Pink-tailed Worm-lizard. TPC will also
operate a stand alone, profitable mixed agricultural enterprise (sheep and cattle) that demonstrates leading practice sustainable farming technologies –
including genetics, soil and pasture management and engineering solutions.
PEAK HILL GOLD MINE
Alkane’s Peak Hill Gold Mine (PHGM), located 15km south of Tomingley Gold Operations, was in operation from 1996 to 2005. The mining operations at
Peak Hill were designed from day one with progressive rehabilitation in mind, and this has continued since closure, during the care and maintenance phase.
Today, the rehabilitated final landforms are becoming increasingly species-rich, with several native bird and mammal species (absent prior to mining)
established as a result of Alkane’s rehabilitation (re-greening) of the mining leases and adjoining land.
During the rehabilitation process, Alkane has continued to use remaining site infrastructure and to maintain the mining leases, an Environment Protection
Licence and a 1993 development approval from Parkes Shire Council, along with 22 approvals and licences for the mining and processing operations.
Mine Operations Plan
In July 2014, Alkane submitted a draft Mine Operations Plan (MOP) 2014-2022 to the relevant regulatory body. The purpose of the PHGM MOP is to outline
and schedule the remaining actions required to make the site ready for the PHGM leases to be either renewed or relinquished. The PHGM MOP was approved
on 30 March 2016 until 17 January 2022.
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A L K A N E R E S O U R C E S LT D
During the year 4Ha of PHGM land were subdivided and gifted to Parkes Shire Council. This subdivision satisfied a Parkes Shire Council consent condition to
provide land for the establishment of a new waste transfer station for the town of Peak Hill. The waste transfer station will deliver an improvement in waste
management, compared with the solid waste landfill in use for the past few decades.
Open Cut Experience
The PHGM site hosts a tourist attraction that provides the public with insights into the history and practice of gold mining from 1889-1917 and the period
1996-2005. Known as the Open Cut Experience, the facility encompasses the five mining voids in a pleasant bushland setting, and has been overseen by
Parkes Shire Council since 2007. This tourism asset continues to generate economic activity in the local area.
The PHGM is one of only a few modern gold mines with an active mining lease open to the public, making the Open Cut Experience a unique experience
where visitors can learn about modern mining and land rehabilitation.
EMPLOYEES AND DIVERSITY
Alkane is committed to employing members of the local community where possible, with the majority of employees living in the local area as the Company
does not support a ‘fly-in/fly-out’ scheme.
The Group is required to report annually to the Workplace Gender Equality Agency on matters relating to
gender equality and diversity. The latest report is available in the corporate governance section of the
Company’s website. At financial year end the Group had 212 personnel on the payroll, with 20% being
female. Achieving a good gender balance in such an historically male-dominated industry is a challenge
essential to maintaining a culture of equal opportunity.
Two of Alkane’s employees received industry recognition during the reporting period: Mike Sutherland,
General Manager NSW, received the Environment and Community Leadership award at the NSW Mining 2015
Health, Safety, Environment and Community Awards, for his leadership role across the Company’s operations
in Central West NSW; and Simone Painter (pictured right), Processing Manager at Tomingley Gold Operations,
received the ‘Mentor of the Year’ award at the 2016 Women in Resources National Awards (WIRNAs), hosted
by the Australasian Institute of Mining and Metallurgy (AusIMM).
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COMMUNITY ENGAGEMENT AND SUPPORT
Alkane is an active and engaged member of the communities in which it operates. As a company, our goal is to support the development of more resilient
regional communities through the establishment of permanent infrastructure, the provision of training and career opportunities to local residents, and the
creation of local economic opportunities for service providers. Alkane aims to leave a positive legacy that will long outlive the life of mining operations.
During the year, Alkane actively supported the following communities:
Narromine Shire (TGO). Alkane supported the Narromine Agricultural Show Society and Tomingley and Mungery Picnic Race Clubs again in 2015-2016.
The Company also continued to sponsor the Tomingley Gold Project Community Fund, which aims to foster close relations between the TGO team and the
local Narromine Shire community by providing support for local infrastructure and events. Two rounds of the fund were awarded during the reporting period,
in November 2015 and June 2016. Recipients included the Tomingley Picnic Race Club, the Narromine Agricultural Show Society, the Narromine Ministers
Association, Narromine High School, the Tomingley Advancement Association, the Narromine Cancer Support Group, and Narromine Pool. In September
2015, representatives of the Company were delighted to attend the official opening of the new amenities block at Tomingley Racecourse and Recreation
Ground, which received $94K in funding from the Tomingley Gold Project Community Fund during 2014.
As part of the Company’s commitment to provide development contributions for public infrastructure, the original Planning Agreement with Narromine Shire
Council has been amended to allow TGO to explore options for the long-term supply of raw water to the local Tomingley village storage dam.
Parkes Shire (Peak Hill Gold Mine). Alkane supported the PA&H Association (Peak Hill Show), Peak Hill FM (community radio station), Peak Hill
Aboriginal Community Working Party (Back to Bulgandramine Weekend) and the Peak Hill Country Crafts & VIC.
Western Plains Regional Council local government area (DZP). Alkane supported the Dubbo College Senior Campus 4X4 Team Zircon to travel to
England for the International Engineering Challenge, a Dubbo College student to travel to the National University of Singapore Science Summer Camp, Dubbo
Community Men’s Shed, and had a presence at several employment/career forums with Clontarf Academy and Dubbo College Senior Campus.
Alkane also sponsored the Central West Championship Yard Dog trials at the Wellington Show and Yeoval Central School for a school excursion to Sydney.
In addition to various sponsorships and donations, Alkane sometimes hosts groups wishing to tour its operations. Several community and educational groups
visited one or both of the TGO and the DZP sites during the reporting period, including representatives of the Clontarf Foundation, the recently established DZP
Community Consultative Committee, scholarship students from AusIMM, and students from both Wollongong and Newcastle Universities.
In order to ensure strong relationships are maintained with local communities, Alkane is also committed to clear and regular communications about its
operations and development activities. The Company ensures community members can easily engage with Alkane representatives from the inception of
projects through to completion. Activities in 2015-2016 include:
(cid:1) Establishment of the DZP Community Consultative Committee (CCC) and participation in the TGO CCC. Both have independent chairpersons and
include representatives from a cross-section of the community, including at least one Aboriginal member and a local council member.
(cid:1) Up-to-date detailed community-relevant project information on our website including FAQs, along with the distribution of regular community newsletters.
(cid:1) Regular participation and presentations at regional events to discuss the Group’s projects.
Alkane personnel are engaged with the Industry Based Agreement for Aboriginal Employment and Enterprise Development Steering Committee, the Central
West Mining & Extractive Environment Team (secretariat) and the Western NSW Mining and Resource Development Taskforce.
OCCUPATIONAL HEALTH AND SAFETY REVIEW
Alkane is committed to compliance with all laws and regulations in relation to the environment and occupational health and safety (OHS). The Company
strives for continuous improvement of its standards in parallel with industry-leading practice for Tomingley Gold Operations, the Peak Hill Gold Mine
decommissioning and closure, and for ongoing exploration and mine development.
The Company’s reputation for integrity and responsible behaviour motivates Alkane’s employees and builds trust within the communities in which it operates.
RISK MANAGEMENT
Alkane is committed to the active management of risks to its operations and has a Risk Management Committee comprised of directors and management to
assist the Managing Director to identify, assess, monitor and manage the Company’s risks. The Company’s Risk Management Co-ordinator is tasked with the
responsibility of keeping the risk management policy, framework and registers updated, subject to formal approval of policy amendments by the Board. A
professionally facilitated Enterprise Risk Review Workshop was held in Perth in March 2016.
In the 2016 financial year, TGO completed a key phase of its risk management process, which includes the identification of key threats and the critical controls
to manage those threats. The target closeout of actions associated with critical controls was achieved. TGO continues to validate and subsequently monitor
and audit these critical controls. A specialised software package assists with the management of the complexities for the high level risks.
The Company also conducted numerous DZP construction risk assessments during the Front End Engineering Design (FEED) process.
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OCCUPATIONAL HEALTH AND SAFETY
Alkane’s personnel are distributed across several office locations and operations across Central West NSW (Orange, Dubbo, Peak Hill and Tomingley), Sydney
and Perth. The largest concentration of employees is at Tomingley Gold Operations, located south-west of Dubbo.
The TGO Mine Safety Management and Operations Management systems are in place, with both subjected to a rigorous auditing and inspection regime to
ensure their integrity. A thorough employee safety induction program is used to onboard all employees and contractors at the TGO site to ensure safe
operations at all times.
As for Alkane’s other sites, a full-time site supervisor maintains the Peak Hill Gold Mine leases and infrastructure during decommissioning. The facilities at
the mine site also provide support for exploration activities at the nearby Tomingley Gold Project, which encompasses TGO. Alkane also maintains exploration
offices in Dubbo and Orange to service the Group’s other tenements in Central West New South Wales.
During the reporting period, three injuries resulting in minor work restrictions occurred at TGO, as well as one injury requiring minor medical treatment. TGO
has a total recordable injury frequency rate (TRIFR) of 2.20 per million hours worked, which is well below industry average.
TGO reported four incidents to the NSW Environment Protection Authority (EPA) during the period of this report, including:
(cid:1) Two dust exceedances – TGO has continued to develop onsite procedures to further mitigate dust generating activities, including stabilisation of topsoil
dumps and further monitoring of dig faces and tip heads, with fleet changes being made where necessary.
(cid:1) Two overpressure exceedances – following consultation with an independent expert, operational changes during presplitting were implemented, greatly
reducing overpressure results.
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DIRECTOR S’ REPO RT
Your Directors present their report on the Consolidated Entity consisting of Alkane Resources Ltd and the entities it controlled at the end of, or during, the year
ended 30 June 2016. Throughout the report, the Consolidated Entity is referred to as the Group.
DIRECTORS
The following persons were Directors of Alkane Resources Ltd during the whole of the financial year and up to the date of this report:
(cid:1) J S F Dunlop
(cid:1) D I Chalmers
(cid:1) I J Gandel
(cid:1) A D Lethlean
INFORMATION ON DIRECTORS
John Stuart Ferguson Dunlop - Non-Executive Chairman
BE (Min), MEng SC (Min), PCertArb, FAusIMM (CP), FIMM, MAIME, MCIMM
Appointed Director and Chairman 3 July 2006
Mr Dunlop is a consultant mining engineer with over 46 years surface and underground mining experience both in Australia and overseas. He is a former
Director of the Australasian Institute of Mining and Metallurgy (2001 - 2006) and is a Board member and past Chairman of MICA (Mineral Industry
Consultants Association).
Mr Dunlop was Non-Executive Chairman of Alliance Resources Limited (30 November 1994 - 31 May 2016). He has also been a Non-Executive Director of
Copper Strike Limited (9 November 2009 - 6 June 2014) and a Director of Gippsland Limited (1 July 2005 - 12 July 2013). Mr Dunlop is also a certified
arbitrator and mineral asset valuer and consults widely overseas.
Mr Dunlop is a member of the Audit Committee and Chairman of the Remuneration and Nomination Committees.
David Ian (Ian) Chalmers - Managing Director
MSc, FAusIMM, FAIG, FIMM, FSEG, MSGA, MGSA, FAICD
Appointed Director 10 June 1986, appointed Managing Director 5 October 2006
Mr Chalmers is a geologist and graduate of the Western Australia Institute of Technology (Curtin University) and has a Master of Science degree from the
University of Leicester in the United Kingdom. He has worked in the mining and exploration industry for over 45 years, during which time he has had
experience in all facets of exploration and mining through feasibility and development to the production phase.
Mr Chalmers was Technical Director until his appointment as Managing Director in 2006, overseeing the Group's minerals exploration efforts across Australia
(New South Wales and Western Australia), Indonesia and New Zealand and the development and operations of the Peak Hill Gold Mine (NSW). Since taking on
the role as chief executive he has steered the Company through construction and development of the now fully operational Tomingley Gold Operations and to
the threshold of development of the world class Dubbo Zirconia Project.
Mr Chalmers is a member of the Nomination Committee.
Ian Jeffrey Gandel - Non-Executive Director
LLB, BEc, FCPA, FAICD
Appointed Director 24 July 2006
Mr Gandel is a successful Melbourne based businessman with extensive experience in retail management and retail property. He has been a Director of the
Gandel Retail Trust and has had an involvement in the construction and leasing of Gandel shopping centres. He has previously been involved in the Priceline
retail chain and the CEO of a chain of serviced offices.
Through his private investment vehicles, Mr Gandel has been an investor in the mining industry since 1994. Mr Gandel is currently a substantial holder in a
number of publicly listed Australian companies and, through his private investment vehicles, now holds and explores tenements in his own right in Victoria,
Western Australia and New South Wales. Mr Gandel is also a Non-Executive Director of Alliance Resources Ltd (appointed 15 October 2003) and in June
2016 was appointed Non-Executive Chairman of that company. He is also Non-Executive chairman of Octagonal Resources Limited (appointed 10 November
2010) and has been a Director and Non-Executive Chairman of Gippsland Limited (24 June 2009 - 14 April 2015).
Mr Gandel is a member of the Audit, Remuneration and Nomination Committees.
A N N U A L R E P O R T 2 0 1 6
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DIRECTOR S’ REPO RT CONTINUED
INFORMATION ON DIRECTORS (continued)
Anthony Dean Lethlean - Non-Executive Director
BAppSc (Geology)
Appointed Director 30 May 2002
Mr Lethlean is a geologist with over 10 years mining experience including 4 years underground on the Golden Mile in Kalgoorlie. In later years, Mr Lethlean
has been working as a resources analyst with various stockbrokers including formerly as a principal of Helmsec Global Capital Limited. Mr Lethlean is a Non-
Executive Director of Alliance Resources Limited (appointed 15 October 2003).
Mr Lethlean is senior independent Director, Chairman of the Audit Committee and a member of the Remuneration and Nomination Committees.
COMPANY SECRETARY
Karen E V Brown
BEc (hons)
Ms Brown is a Director and Company Secretary of Mineral Administration Services Pty Ltd which provides company secretarial, corporate administration and
accounting services to the Group. She has considerable experience in corporate administration of listed companies over a period of some 28 years, primarily
in the mineral exploration industry. She is currently also Company Secretary of publicly listed General Mining Corporation Limited.
DIVIDENDS - ALKANE RESOURCES LTD
No dividends have been paid by the Company during the financial year ended 30 June 2016 nor have the Directors recommended that any dividends be paid
(2015: nil).
REVIEW OF OPERATIONS
The Group continues to be actively involved in mineral exploration and evaluation, development and extraction, focussing on its core projects at Tomingley and
Dubbo in New South Wales.
RESULT FOR THE YEAR
The Group’s net profit for the period after tax was $4,695,000 (30 June 2015: net loss $4,086,000). The result includes a profit before tax of $14,304,000 in
relation to the Tomingley Gold Operations (30 June 2015: $589,000)
TOMINGLEY GOLD OPERATIONS
The gold operations at Tomingley are located approximately 50 kilometres south-west of Dubbo in the Central West of NSW. The operations are based on four
gold deposits. Wyoming One, Wyoming Three, Caloma One and Caloma Two.
Mining occurred in three pits during the year, Wyoming Three, Caloma One and Wyoming One. Mining in the Wyoming Three pit concluded in October 2015
with the pit producing over 40% more ounces than the modelled resource. Caloma One provided the main ore source for the year with slightly negative
reconciliations against the resource model influenced predominantly by the presence and interpretation of the boundaries of some dolerite dykes in the
resource model. As a result the resource model was revised in the June 2016 quarter with reconciliation to date in line with the updated model. Waste removal
commenced in a starter pit in Wyoming One in late July 2015 with first ore extracted in the March quarter. Initial reconciliations in Wyoming One have met
expectations. The Caloma Two resource has been incorporated into the open pit development schedule and regulatory approval for its development was
confirmed in July 2016.
Total material movements for the period of 6,706,960 bcm comprised 6,199,820 bcm of waste and 507,140 bcm of ore at an average stripping ratio of 12.2.
The increase in the stripping ratio from the corresponding period reflects the waste removal in the Wyoming One pit.
Milling for the period was in line with design capacity at 1,096,105 tonnes. The reduction in milled tonnes from the prior comparative period reflects the
transition to predominately fresh ore feed. Gold recovery reduced from 93.9% to 90.9% in line with expectations, also a reflection of the transition to fresh ore
feed.
Production for the year was within market guidance at 67,812 ounces at an all in sustaining cost (AISC) of $1,256 per ounce also within guidance. The
average sales price achieved for the period of $1,605 per ounce resulted in a strong average margin of $349 per ounce.
34
A L K A N E R E S O U R C E S LT D
REVIEW OF OPERATIONS (continued)
TOMINGLEY GOLD OPERATIONS (continued)
The table below summarises the key operational information.
TGO
Production
Ore mined
Waste mined
Stripping ratio
Ore mined
Grade mined(2)
Ore milled
Head grade
Gold recovery
Gold production(3)
Revenue Summary
Gold sales
Average price
realised
Sales revenue
Cost Summary
Mining
Processing
Site support
C1 Cash Cost
Royalties
Sustaining capital
Rehabilitation
Corporate
AISC(1)
Stockpiles
Ore stockpiles
Stockpile grade(2)
Bullion on hand
UNIT
BCM
BCM
Ratio
Tonnes
g/t
Tonnes
g/t
%
Ounces
30 SEP
2015
157,755
1,676,850
10.6
433,744
1.87
271,980
2.44
92.6
19,789
QUARTER ENDED
31 DEC
2015
31 MAR
2016
100,229
1,447,753
14.4
277,061
1.84
257,998
1.93
91.4
15,347
77,978
1,839,737
23.6
198,877
1.93
270,155
2.02
89.5
14,612
30 JUN
2016
171,178
1,235,480
7.2
375,772
1.75
295,972
1.94
90.5
18,064
FINANCIAL YEAR ENDED
30 JUN
2016
30 JUN
2015
507,140
6,199,820
12.2
1,285,454
1.84
1,096,105
2.08
90.9
67,812
619,753
5,730,662
9.2
1,386,291
1.66
1,140,704
2.01
93.9
69,612
Ounces
21,000
14,250
15,000
17,733
67,983
70,734
A$/oz
A$M's
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
Tonnes
g/t
Ounces
1,565
32.9
784
242
78
1,104
46
36
16
32
1,234
1,583
22.6
731
322
113
1,166
43
44
20
43
1,316
1,621
24.3
774
361
114
1,249
45
1
22
41
1,358
1,658
29.4
659
266
84
1,009
51
39
15
35
1,149
1,605
109.1
736
292
96
1,124
46
31
18
37
1,256
1,441
101.9
707
321
95
1,123
40
25
21
40
1,249
678,681
0.95
1,951
698,744
0.94
3,040
618,218
0.80
2,645
701,047
0.82
2,971
701,047
0.82
2,971
468,032
0.84
3,169
(1)
(2)
(3)
All in Sustaining Cost (AISC) comprises all site operating costs, royalties, mine exploration, sustaining capex, mine development and an allocation of corporate costs on the
basis of ounces produced. AISC does not include share based payments or net realisable value provision for product inventory.
Based on the resource models.
Represents gold poured at site, not adjusted for refining adjustments which results in minor differences between the movements in bullion on hand and the difference between
production and sales.
Development of the underground mine continues with completion of a pre-feasibility study during the period and generation of an initial underground reserve.
Underground operations below Wyoming One and Caloma One and Two are incorporated into the life of mine schedule.
A N N U A L R E P O R T 2 0 1 6
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DIRECTOR S’ REPO RT CONTINUED
REVIEW OF OPERATIONS (continued)
DUBBO ZIRCONIA PROJECT
Alkane Resources Ltd’s subsidiary, Australian Zirconia Limited (AZL), is proceeding towards development of the Dubbo Zirconia Project (DZP or the Project), a
potential strategic supply of critical minerals for a range of ‘high-tech’ and sustainable technologies. It is based on a large resource of zirconium, hafnium,
niobium, tantalum, yttrium and rare earth elements, located at Toongi, 30 kilometres south of the large regional centre of Dubbo in the Central West of NSW.
The DZP is a unique, long-life asset with a potential mine life of 70 plus years. Unlike many projects of this kind, it is a polymetallic deposit providing
potential revenue from multiple product streams.
The Project is fully permitted with all necessary approvals in place to allow commencement of construction activities. Following on from receipt of State
Government Planning Approval, the Project received Federal Environmental Approval in August 2015. The mining lease was granted by the NSW Department
of Industry, Division of Resources and Energy on 18 December 2015 and the NSW Environment Protection Authority granted an Environment Protection
Licence (EPL) covering the construction for the DZP on 14 March 2016.
The final land acquisitions covering the project area were completed during the year with AZL owning circa 3,500 hectares around the site. Of this land, 500
hectares is required for mining and processing operations, around 1,000 hectares is allocated to biodiversity offset (a federal environmental requirement) and
the remaining 2,000 hectares will be retained for farming. To manage the farming activities and biodiversity offsets, Toongi Pastoral Company Pty Ltd (TPC)
has been formed and a professional manager engaged to oversee these operations. A comprehensive plan is being developed for TPC to be a self-sustaining
and profitable agricultural business.
The project remains ready for detailed design and construction to commence, contingent on financing. The front end engineering and design (FEED) with
Hatch was completed in August 2015 confirming the Project's robust economics and an agreement was entered into with Outotec, a global minerals and
metals processing technology supplier, to conduct an early contractor involvement (ECI) process to identify further value in the project design produced by
the extensive FEED. After the initial phase of the ECI, the intention is for Outotec to execute the process plant segment of the scope for AZL on an Engineering,
Procurement and Construction (EPC) basis. This has the dual advantages of developing key technology and a support relationship and capping the execution
risk for AZL.
Further process development work on the hafnium and zirconium refining circuit was performed during the period improving the understanding of the flow
sheet. This includes the process drivers that affect product recoveries and specifications of the zirconium strip liquor, and therefore the hafnium concentrate
and zirconium specifications of the final products. Inclusion of the hafnium circuit in the DZP has added significant value to the Project and has been well
recognised by key stakeholders.
Demonstration pilot plant trials are planned in the September 2016 quarter to produce additional product to assist with process refinement and confirmation of
test results obtained at the laboratory scale. This will also involve the production of hafnium concentrate and zirconium products for customer evaluations, a
critical pre-curser to securing committed offtake agreements, as well as rare earth concentrate.
In April 2016 AZL executed a letter of intent with Vietnam Rare Earth JSC (VTRE) to toll process the rare earth concentrate to be produced by the DZP into
individual rare earth products. VTRE is a specialist Vietnamese chemical and advanced materials company which operates a processing plant to produce
separated rare earth oxides from rare earth concentrates. Further toll processing of DZP feed to produce rare earth metal alloys is also intended along with the
establishment of a joint marketing company as the vehicle to market VTRE’s currently produced rare earths and associated downstream products. The
agreement provides AZL with an exclusive right for twelve months to complete due diligence and for the parties to finalise the terms of the agreements
envisaged.
Marketing activities continued throughout the year with dispatch of further samples, plus meetings with major companies from Europe, Japan, Korea, USA and
China for DZP products. Significant focus continues to be applied to securing offtake partners. Subsequent to year end, AZL entered into an exclusive
marketing and sales agreement with Minchem Ltd for all zirconium products produced by the company for five years from commencement of DZP production.
AZL continues to work with its advisors, Sumitomo Mitsui Banking Corporation to progress funding of the project. The broad strategy remains with the
intention that strategic investment in the project, Export Credit Agency finance and commercial debt will be maximised. The next key step in the financing
program is customer confirmation of products certification and securing committed long term offtake agreements that will underpin the financial modelling.
EXPLORATION
The Company maintained a focussed multi commodity exploration program in the Central West of NSW with low level activities during the period. Alkane
completed the acquisition of Kaiser porphyry gold-copper prospect (part of Bodangora Project) through the payment of $200,000 and has also entered in to a
farm in agreement with Clancy Exploration Ltd to earn up to 80% of the Orange East project through expenditure of $1 million over six years.
Encouraging intercepts were recorded from drilling of targets within the Bodangora-Kaiser Project and at the Elsienora Project, and further exploration is
planned to advance these projects during 2017.
36
A L K A N E R E S O U R C E S LT D
REVIEW OF OPERATIONS (continued)
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
The financial position and performance of the Group has been impacted by the following specific events or transactions during the year ended 30 June 2016
when compared to the year ended 30 June 2015:
(cid:1) During May 2016, a one for five share entitlement issue was undertaken raising $12,388,000 (before costs) to provide funding support for the ongoing
development of the DZP. The shortfall of the entitlements issue was placed to institutional and professional investors in July 2016 raising $4,141,000 (before
costs).
For a detailed discussion about the Group’s performance please refer to the Review of Operations.
EVENTS SINCE THE END OF THE FINANCIAL YEAR
Since 30 June 2016, the Group finalised the shortfall placement of the one for five share entitlement issue. Please refer to the significant changes in the state
of affairs above for more details.
The Group entered into a $14,000,000 working capital facility with Macquarie Bank Limited comprising a project loan facility, performance bond facility and
hedging facility. Facility documentation was completed in early July allowing for draw down on the loan and bond facilities.
The Group entered into an exclusive marketing and sales agreement with Minchem Ltd in August. Refer to the Review of Operations report for more details.
No other matter or circumstance has arisen since 30 June 2016 that has significantly affected the Group's operations, results or state of affairs, or significantly affect;
(a)
(b)
(c)
the Group's operations in future financial years, or
the results of those operations in future financial years, or
the Group's state of affairs in future financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
The Group intends to continue evaluation and development activities in relation to the Dubbo Zirconia Project in line with details provided in the review of
operations. Efforts at the Tomingley Gold Operation continue to be focussed on optimising performance and extending the mine life for both open pit and
underground operations. Exploration and evaluation activities will continue on existing tenements and opportunities to expand the Group's tenement portfolio
will be pursued with a view to ensuring there is a pipeline of development opportunities to be considered.
Refer to the Review of Operations for further detail on planned developments.
ENVIRONMENTAL REGULATION
The Group is subject to significant environmental regulation in respect of its exploration, development, construction and mining activities.
The Group aspires to the highest standards of environmental management and insists its staff and contractors maintain that standard. A significant
environmental incident is considered to be one that causes a major impact or impacts to land biodiversity, ecosystem services, water resources or air, with
effects lasting greater than one year. There were no significant environmental incidents reported at any of the Group's operations.
FINES AND PROSECUTION
Tomingley Gold Operations Pty Ltd received a fine during the current year of $95,000 in relation to the two incidents disclosed in the financial statements for
the year ended 30 June 2015 (2015:nil)
MEETINGS OF DIRECTORS
The numbers of meetings of the Company's Board of Directors and of each Board Committee held during the year ended 30 June 2016, and the numbers of
meetings attended by each Director were:
FULL MEETINGS
OF DIRECTORS
AUDIT
NOMINATION
REMUNERATION
MEETINGS OF COMMITTEES
ATTENDED
HELD
ATTENDED
HELD
ATTENDED
HELD
ATTENDED
HELD
J S F Dunlop
D I Chalmers
I J Gandel
A D Lethlean
17
20
20
19
20
20
20
20
2
*
3
2
3
*
3
3
-
-
1
1
1
1
1
1
1
*
2
2
* Not a member of the relevant committee
A N N U A L R E P O R T 2 0 1 6
2
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2
2
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DIRECTOR S’ REPO RT CONTINUED
REMUNERATION REPORT
The Directors' are pleased to present Alkane Resources Ltd's remuneration report which sets out remuneration information for the Company's Non-Executive
Directors, Executive Director and other Key Management Personnel.
The report contains the following sections:
(a)
Key Management Personnel disclosed in this report
(b) Remuneration governance
(c) Use of remuneration consultants
(d)
Executive remuneration policy and framework
(e) Statutory performance indicators
(f)
Non-Executive Director remuneration policy
(g) Voting and comments made at the Company's 2015 Annual General Meeting
(h) Details of remuneration
(i)
(j)
Service agreements
Details of share-based payments and performance against key metrics
(k) Shareholdings and share rights held by Key Management Personnel
(a) KEY MANAGEMENT PERSONNEL DISCLOSED IN THIS REPORT
Non-Executive and Executive Directors
(cid:1) J S F Dunlop
(cid:1) D I Chalmers
(cid:1) I J Gandel
(cid:1) A D Lethlean
Other Key Management Personnel
NAME
POSITION
N Earner
M Ball
K E Brown
Chief Operations Officer
Chief Financial Officer
Company Secretary
There have been no changes to Directors or Key Management Personnel since the end of the reporting period.
(b) REMUNERATION GOVERNANCE
The Company has established a Remuneration Committee to assist the Board in fulfilling its corporate governance responsibilities with respect to
remuneration by reviewing and making appropriate recommendations to the Board on:
(cid:1) the overall remuneration strategy and framework for the Company;
(cid:1) the operation of the incentive plans which apply to the Executive team, including the appropriateness of key performance indicators and performance
hurdles; and
(cid:1) the assessment of performance of and remuneration of the Executive director, other Key Management Personnel and Non-Executive Directors.
The Remuneration Committee is a Committee of the Board and at the date of this report the members were independent Non-Executive Directors J S F Dunlop,
A D Lethlean and I J Gandel.
Their objective is to ensure that remuneration policies and structures are fair and competitive and aligned with the long-term interests of the Company and its
shareholders.
The Company's annual Corporate Governance Statement provides further information on the role of this Committee.
38
A L K A N E R E S O U R C E S LT D
REMUNERATION REPORT (continued)
(c) USE OF REMUNERATION CONSULTANTS
No remuneration consultants were engaged in the financial year ended 30 June 2016 to provide remuneration advice.
(d) EXECUTIVE REMUNERATION POLICY AND FRAMEWORK
In determining Executive remuneration, the Board (or the Remuneration Committee as its delegate) aims to ensure that remuneration practices:
(cid:1) are competitive and reasonable, enabling the Company to attract and retain key talent while building a diverse, sustainable and high achieving workforce;
(cid:1) are aligned to the Company’s strategic and business objectives and the creation of shareholder value;
(cid:1) promote a high performance culture recognising that leadership at all levels is a critical element in this regard;
(cid:1) are transparent; and
(cid:1) are acceptable to shareholders.
The Executive remuneration framework has three components:
(cid:1) Total Fixed Remuneration (TFR),
(cid:1) Short-Term Incentives (STI), and
(cid:1) Long-Term Incentives (LTI).
(i)
Executive remuneration mix
The Company has in place Executive incentive programs which place a material portion of Executive pay "at risk".
The table below reflects the target remuneration mix for the year to 30 June 2016 for the Key Management Personnel eligible to receive incentives. It reflects
the STI opportunity for the current year that will be available if the performance conditions are satisfied and the value of the LTI rights granted during the year,
as determined at grant date.
EXECUTIVE
POSITION
FIXED REMUNERATION
D I Chalmers(3)
N Earner
M Ball
Managing Director
Chief Operations Officer
Chief Financial Officer
44%
44%
44%
AT RISK REMUNERATION
STI(1)
12%
12%
12%
LTI(2)
44%
44%
44%
(1)
(2)
Subject to achievement of all performance targets and service condition.
Subject to achievement of all performance targets, Total Shareholder Return (TSR) target and service condition over the three year vesting period to 30 June 2018.
(3)
Incentives relating to the Managing Director are subject to shareholder approval which was received at the 2015 Annual General Meeting.
(ii) Total fixed remuneration
Total Fixed Remuneration (TFR) consists of base salary, benefits and superannuation. Benefits may include health insurance, car allowances and salary
sacrifice arrangements. TFR levels are assessed against the median level of the resources sector through independent market data. Individual TFR is
determined within an appropriate range around the market median by referencing the specific role and associated responsibilities, individual experience and
performance.
A review is conducted of remuneration for all employees and Executives on an annual basis, or as required. The Remuneration Committee is responsible for
determining Executive TFR.
(iii)
Incentive arrangements
The Company uses both short term and long term incentive programs to balance the short and long term aspects of business performance, to reflect market
practice, to attract and retain key talent and to ensure a strong alignment between the incentive arrangements of Executives and the creation and delivery of
shareholder return.
Short-term incentives
All employees including Executives have the opportunity to earn an annual Short-Term Incentive (STI) if predefined targets are achieved. The maximum STI
opportunity for the Managing Director and invited Executives is 25% of total fixed remuneration (calculated at the time of approval by the Remuneration
Committee).
A N N U A L R E P O R T 2 0 1 6
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E
G
O
V
E
R
N
A
N
C
E
T
E
N
E
M
E
N
T
S
C
H
E
D
U
L
E
DIRECTOR S’ REPO RT CONTINUED
REMUNERATION REPORT (continued)
(d) EXECUTIVE REMUNERATION POLICY AND FRAMEWORK (continued)
(iii)
Incentive arrangements (continued)
Short-term incentives (continued)
The Executive STI are provided in the form of rights to ordinary shares in the Company that will vest at the end of the performance period (generally 12
months) provided the predefined targets are met. On vesting, the rights automatically convert into one ordinary share each. The Executives do not receive any
dividends and are not entitled to vote in relation to the rights to shares prior to vesting. If an Executive ceases to be employed by the Group within this period
(the service condition), the rights will be forfeited, except in limited circumstances that are approved by the Board on a case-by-case basis. The STI rights are
governed by the performance rights plan approved by shareholders at the 2013 annual general meeting.
STI awards for the Executive team in the 2016 financial year were based on the scorecard measures and weightings as disclosed below. Targets were approved
by the Remuneration Committee at the beginning of the financial year through a rigorous process and align to the Company’s strategic and business
objectives. Targets are reviewed and reset annually.
PERFORMANCE CATEGORY
PERFORMANCE METRICS
WEIGHTING
Financial & operational
Production and operating cost performance for the Tomingley Gold Operations
Growth
Sustainability
Milestones relating to advancing the development of the Dubbo
Zirconia Project and execution of the Board approved exploration
plan to develop existing resources and discover new resources
Specific targets relating to the development of and compliance
with safety and environmental management systems, and
engagement with the local community
40%
44%
16%
The Remuneration Committee is responsible for determining the STI to be paid based on an assessment of whether the predefined targets are met. To assist in
this assessment, the Committee receives detailed reports on performance from management. The Committee has the discretion to adjust short term incentives
downwards in light of unexpected or unintended circumstances.
Long-term incentives
Long-term incentives are provided via a combination of performance rights and share appreciation rights. The performance rights plan was approved by
shareholders at the 2013 annual general meeting. The share appreciation rights plan was approved by shareholders at the 2014 annual general meeting.
Together they are referred to as the Long Term Incentive Plan (LTIP).
The LTIP is designed to focus Executives on delivering long term shareholder returns. Eligibility for the plan is restricted to Executives and nominated Senior
Managers, being the employees who are most able to influence shareholder value. Under the plan, participants have an opportunity to earn up to 100% of their
total fixed remuneration (calculated at the time of approval by the Remuneration Committee) comprised of part performance rights and part share appreciation
rights, provided that predefined targets are met over a three year performance period. Performance rights are the reward vehicle for targets that are milestone
based whereas share appreciation rights are the reward vehicle for shareholder return targets as the number of shares to be issued upon vesting is impacted by
the quantum of shareholder value created. The table below provides details on the LTIP targets set at the beginning of the 30 June 2016 financial year, their
relative weighting and the reward vehicle used for each target. The LTIP vesting period is three years (i.e. 30 June 2018).
LTI REWARD VEHICLE
PERFORMANCE METRICS
WEIGHTING
Performance rights
Progress of evaluation and development of Dubbo
Zirconia Project towards production
Increase Tomingley Gold Operation value through
productivity improvements and mine life extension
Share appreciation rights
Absolute Total Shareholder Return (TSR)
40%
10%
50%
The performance rights component of the LTI will be provided in the form of rights to ordinary shares in Alkane Resources Ltd that will vest at the end of the
three year vesting period provided the predefined targets are met. On vesting, the rights automatically convert into one ordinary share each. Participants do not
receive any dividends and are not entitled to vote in relation to the rights to shares prior to the vesting period. If a participant ceases to be employed by the
Group within this period, the rights will be forfeited, except in limited circumstances that are approved by the Board on a case-by-case basis.
40
A L K A N E R E S O U R C E S LT D
REMUNERATION REPORT (continued)
(d) EXECUTIVE REMUNERATION POLICY AND FRAMEWORK (continued)
(iii)
Incentive arrangements (continued)
Long-term incentives (continued)
Under the share appreciation rights plan, participants are granted rights to receive fully paid ordinary shares in the Company. Rights will only vest if the
predefined TSR performance condition is met. If a participant ceases to be employed by the Group within this period, the rights will be forfeited, except in
limited circumstances that are approved by the Board on a case-by-case basis.
Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the plan.
An absolute TSR target, as opposed to a TSR target relative to an index or a peer group, has been used to reflect:
(cid:1) the developmental stage of the Company and the impact that the successful development of the Dubbo Zirconia Project is expected to have on the
market value of the Company; and
(cid:1) the absence of a sufficient number of comparable companies to benchmark against.
Targets are reviewed annually and set for a forward three year period. Targets reflect factors such as the expectations of the Company’s business plans, the
stage of development of the Company’s projects and the industry business cycle. The most appropriate target benchmark (i.e. the use of an absolute or a
relative TSR target) will be reviewed each year prior to the granting of rights.
Vesting of the rights is subject to the Company’s TSR, including share price growth, dividends and capital returns, exceeding certain growth hurdles over a
three-year period as set out in the table below.
TSR COMPOUND ANNUAL GROWTH RATE (CAGR)
% SHARE APPRECIATION RIGHTS VESTING
Less than 15% CAGR
15% CAGR
Above 15% CAGR up to 25% CAGR
Above 25% CAGR
Nil
50% vesting
Pro rata vesting from 50% - 100%
100%
The Remuneration Committee is responsible for determining the LTI to be paid based on an assessment of whether the predefined targets are met. To assist in
this assessment, the Committee receives detailed reports on performance from management. The Committee has the discretion to adjust LTI's downwards in
light of unexpected or unintended circumstances.
On vesting, the Remuneration Committee will determine whether the rights will be settled by the issue or transfer of ordinary shares or by cash settlement.
(iv) Clawback policy for incentives
Under the terms and conditions of the Company’s incentive plan offer and the plan rules, the Board (or the Remuneration Committee as its delegate) has
discretion to determine forfeiture of unvested equity awards in certain circumstances (e.g. unlawful, fraudulent or dishonest behaviour or serious breach of
obligations to the Company). All incentive offers and final outcomes are subject to the full discretion of the Board (or the Remuneration Committee as its
delegate).
(v) Share trading policy
The trading of shares issued to participants under any of the Company’s employee equity plans is subject to, and conditional upon, compliance with the
Company’s employee share trading policy. Executives are prohibited from entering into any hedging arrangements over unvested rights under the Company’s
employee incentive plans. The Company would consider a breach of this policy as gross misconduct which may lead to disciplinary action and potentially
dismissal.
(e) STATUTORY PERFORMANCE INDICATORS
The Company aims to align Executive remuneration to the Company’s strategic and business objectives and the creation of shareholder wealth. The table
below shows measures of the Group’s financial performance over the last 5 years as required by the Corporations Act 2001. However, these are not necessarily
consistent with the specific measures in determining the variable amounts of remuneration to be awarded to Key Management Personnel. As a consequence,
there may not always be a direct correlation between the statutory key performance measures and the variable remuneration rewarded.
A N N U A L R E P O R T 2 0 1 6
41
C
O
M
P
A
N
Y
I
N
F
O
R
M
A
T
I
O
N
G
R
O
U
P
O
V
E
R
V
I
E
W
I
B
U
S
N
E
S
S
R
E
V
I
E
W
I
F
I
N
A
N
C
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
N
F
O
R
M
A
T
I
O
N
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
T
E
N
E
M
E
N
T
S
C
H
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D
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DIRECTOR S’ REPO RT CONTINUED
REMUNERATION REPORT (continued)
(e) STATUTORY PERFORMANCE INDICATORS (continued)
Revenue ($'000)
Profit/(loss) for the year attributable to owners ($'000)
Basic earnings/(loss) per share (cents)
Dividends payments ($'000)
Share price at period end (cents)
Total KMP incentives vested as a
percentage of profit/(loss) for the year %
(1)
Six month period
(f) NON-EXECUTIVE DIRECTOR REMUNERATION POLICY
30 JUNE
2016
109,624
4,695
1.1
-
0.20
30 JUNE
2015
102,467
(4,086)
(1.0)
-
0.28
30 JUNE
2014
25,264
(6,170)
(1.7)
-
0.27
30 JUNE
2013(1)
1,370
(66,418)
(17.8)
-
0.31
3.0%
0.0%
0.0%
0.1%
31 DEC
2012
96,716
66,535
0.20
-
0.68
0.1%
On appointment to the Board, all Non-Executive Directors enter into a Service Agreement with the Company in the form of a letter of appointment. The letter
summarises the Board policies and terms, including remuneration, relevant to the office of Director.
Non-Executive Directors receive a Board fee and fees for chairing or participating on Board Committees. Non-Executive Directors appointed do not receive
retirement allowances. Fees provided are inclusive of superannuation and the Non-Executive Directors do not receive performance-based pay.
Fees are reviewed annually by the Remuneration Committee taking into account comparable roles and market data obtained from independent data providers.
The current base fees for Non-Executive Directors have not changed since 1 January 2013.
The maximum annual aggregate Directors’ fee pool limit (inclusive of applicable superannuation) is $700,000 and was approved by shareholders at the
Annual General Meeting on 16 May 2013.
Details of Non-Executive Director fees in the year ended 30 June 2016 are as follows:
Base fees
Chair
Other Non-Executive Directors
Additional fees
Audit Committee - chair
Audit Committee - member
Remuneration Committee - chair
Remuneration Committee - member
$ PER ANNUM
125,000
75,000
7,500
5,000
7,500
5,000
For services in addition to ordinary services, Non-Executive Directors may charge per diem consulting fees at the rate specified by the Board from time to time
for a maximum of 4 days per month over a 12 month rolling basis. Any fees in excess of this limit are to be approved by the Board.
(g) VOTING AND COMMENTS MADE AT THE COMPANY'S 2015 ANNUAL GENERAL MEETING
The Company received more than 89% of “yes” votes on its remuneration report for the last financial period ended 30 June 2015. The Company did not
receive any specific feedback at the AGM or throughout the year on its remuneration practices.
42
A L K A N E R E S O U R C E S LT D
REMUNERATION REPORT (continued)
(h) DETAILS OF REMUNERATION
The following table shows details of the remuneration expense recognised for the Directors and the Key Management Personnel of the Group for the current
and previous financial year measured in accordance with the requirements of the accounting standards.
FIXED REMUNERATION
VARIABLE
TOTAL
NAME
Executive Director
D I Chalmers
Other Key Management Personnel
N Earner
M Ball
K E Brown(5)
K E Brown & L A Colless(5)
Total Executive Director
and other KMP
Total NED
remuneration(6)
Total KMP
remuneration expense
YEAR
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
CASH
SALARY(1)
$
360,000
360,000
396,000
396,000
337,177
337,177
302,229
316,925
1,395,406
1,410,102
283,106
283,106
1,678,511
1,693,208
ANNUAL
AND LONG
SERVICE
LEAVE(2)
$
7,939
5,895
2,321
773
2,438
1,463
-
-
12,698
8,131
-
12,698
8,131
REMUNERATION
POST-
EMPLOYMENT
BENEFITS(3)
$
RIGHTS TO
DEFERRED
SHARES(4)
$
34,200
34,200
37,620
37,620
29,640
29,640
-
-
101,460
101,460
26,894
26,894
128,355
128,354
153,381
65,333
168,719
71,867
132,930
56,622
-
-
455,030
193,822
-
-
455,030
193,822
$
581,163
465,428
604,660
506,260
502,185
424,902
302,229
316,925
1,990,237
1,713,515
310,000
310,000
2,300,237
2,023,515
NON
MONETARY
BENEFITS(1)
$
25,643
-
-
-
-
-
-
-
25,643
-
-
25,643
-
(1)
(2)
(3)
(4)
Short-term benefits as per Corporations Regulation 2M.3.03(1) Item 6.
Other long-term benefits as per Corporations Regulation 2M.3.03(1) Item 8.
Post employment benefits are provided through superannuation contributions.
Rights to deferred shares granted under the executive STI and LTI schemes are expensed over the performance period, which includes the year to which the incentive relates
and the subsequent vesting period of the rights. Rights to deferred shares are equity-settled share based-payments as per the Corporations Regulation 2M.3.03(1) Item11. These
include negative amounts for rights forfeited during the year. In the prior year the table did not include the notional accounting expenses relating to share based payments and
long service leave for certain Key Management Personnel. The comparatives have been updated to include this information. The expenses were correctly recorded in the financial
statements. Details of each grant of share right was provided in the table in section (j). Shareholder approval was received in advance to the grant of share rights where required.
(5) Corporate, administration, accounting and Company secretarial fees paid to Mineral Administration Services Pty Ltd, a Company associated with Ms Brown.
(6)
Refer below for details of NED remuneration.
A N N U A L R E P O R T 2 0 1 6
43
C
O
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P
A
N
Y
I
N
F
O
R
M
A
T
I
O
N
G
R
O
U
P
O
V
E
R
V
I
E
W
I
B
U
S
N
E
S
S
R
E
V
I
E
W
I
F
I
N
A
N
C
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
N
F
O
R
M
A
T
I
O
N
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
T
E
N
E
M
E
N
T
S
C
H
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D
U
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DIRECTOR S’ REPO RT CONTINUED
REMUNERATION REPORT (continued)
(h) DETAILS OF REMUNERATION (continued)
30 JUNE 2016
Non-Executive Directors
J S F Dunlop
I J Gandel
A D Lethlean
Total Non-Executive Directors
30 JUNE 2015
Non-Executive Directors
J S F Dunlop
I J Gandel
A D Lethlean
Total Non-Executive Directors
CASH SALARY
AND FEES
SUPERANNUATION
$
$
TOTAL
$
125,571
77,626
79,909
283,106
125,571
77,626
79,909
283,106
11,929
7,374
7,591
26,894
11,929
7,374
7,591
26,894
137,500
85,000
87,500
310,000
137,500
85,000
87,500
310,000
The relative proportions of remuneration expense recognised during the year that are linked to performance and those that are fixed are as follows:
Executive Director of Alkane Resources Ltd
I Chalmers
Other Key Management Personnel
N Earner
M Ball
FIXED REMUNERATION
AT RISK - STI
AT RISK - LTI
2016
%
74
72
74
2015
%
86
86
87
2016
%
2015
%
8
9
8
-
-
-
2016
%
18
19
18
2015
%
14
14
13
Company Secretary K E Brown, is not an employee of the Company and therefore is not eligible to participate in incentive programs. Instead a fixed fee for
services rendered is paid as set out previously.
(i)
SERVICE AGREEMENTS
Remuneration and other terms of employment for the Managing Director and Key Management Personnel are formalised in Service Agreements. The Service
Agreements specify the components of remuneration, benefits and notice periods. Participation in the STI and LTI plans is subject to the Board’s discretion.
Other major provisions of the Agreements relating to remuneration are set out below.
NAME AND POSITION
TERM OF AGREEMENT
TTFR(1)
TERMINATION PAYMENT(2)
D I Chalmers - Managing Director
N Earner
M Ball
K E Brown
- Chief Operations Officer
- Chief Financial Officer
- Company Secretary
Commencing 1 July 2015 - renewable annually
On-going commencing 2 September 2013
On-going commencing 29 October 2012
Commencing 1 July 2015 - renewable annually
$394,200
$433,620
$366,817
$302,229
By mutual agreement
2 months
2 months
12 months maximum(3)
(1) With the exception of K E Brown who is not an employee of the company Total Fixed Remuneration (TFR) is inclusive of superannuation and is for the year ended 30 June 2016.
TFR is reviewed annually by the Remuneration Committee. D I Chalmers contract includes motor vehicle expenses up to value of $36,000 plus applicable taxes in addition to
the figure in the table above.
(2) Specified termination payments are within the limits set by the Corporations Act 2001 and therefore do not require shareholder approval. In the event that the Managing Director's
contract was terminated and a termination benefit of longer than twelve months was agreed, shareholder approval would be required.
(3)
Termination by mutual agreement.
44
A L K A N E R E S O U R C E S LT D
REMUNERATION REPORT (continued)
(j) DETAILS OF SHARE BASED PAYMENTS AND PERFORMANCE AGAINST KEY METRICS
Details of each grant of share rights affecting remuneration in the current or a future reporting period are set out below.
NAME
Executive Director
I Chalmers
FY2015 LTI - Performance Rights
FY2015 LTI - Share Appreciation Rights
FY2016 STI - Performance Rights
FY2016 LTI - Performance Rights
FY2016 LTI - Share Appreciation Rights
Other Key Management Personnel
N Earner
FY2015 LTI - Performance Rights
FY2015 LTI - Share Appreciation Rights
FY2016 STI - Performance Rights
FY2016 LTI - Performance Rights
FY2016 LTI - Share Appreciation Rights
M Ball
FY2015 LTI - Performance Rights
FY2015 LTI - Share Appreciation Rights
FY2016 STI - Performance Rights
FY2016 LTI - Performance Rights
FY2016 LTI - Share Appreciation Rights
DATE OF
GRANT
NUMBER
OF RIGHTS
GRANTED
FAIR VALUE OF
SHARE RIGHTS
AT DATE OF
GRANT
$
NUMBER
OF SHARE
RIGHTS AT
FAIR VALUE
$
PERFORMANCE
PERIOD
END
SHARE BASED
PAYMENT
EXPENSE
CURRENT
YEAR
$
5/12/2014
5/12/2014
18/11/2015
18/11/2015
18/11/2015
5/12/2014
5/12/2014
18/11/2015
18/11/2015
18/11/2015
5/12/2014
5/12/2014
18/11/2015
18/11/2015
18/11/2015
666,667
1,800,000
281,249
562,500
2,250,000
733,333
1,980,000
309,375
618,750
2,475,000
577,777
1,560,000
243,750
487,500
1,950,000
0.21
0.07
0.25
0.25
0.09
0.21
0.07
0.25
0.25
0.09
0.21
0.07
0.25
0.25
0.09
140,000
126,000
70,312
140,625
202,500
154,000
138,600
77,344
154,688
222,750
121,333
109,200
60,938
121,875
175,500
30/06/2017
30/06/2017
30/06/2016
30/06/2018
30/06/2018
30/06/2017
30/06/2017
30/06/2016
30/06/2018
30/06/2018
30/06/2017
30/06/2017
30/06/2016
30/06/2018
30/06/2018
(14,000)
42,000
46,856
11,025
67,500
(15,400)
46,200
51,542
12,127
74,250
(12,133)
36,400
40,609
9,554
58,500
(1)
The value at grant date for share rights granted during the year as part of remuneration is calculated in accordance with AASB 2 Share Based Payments.
Differences will arise between the number of share rights at fair value in the table above and the STI and LTI percentages mentioned in section (d) due to
different timing of valuation of rights as approved by the Remuneration Committee and at grant. Refer to note 18 for details of the valuation techniques
used for the rights plan.
(2) Share rights only vest if performance and service targets are achieved. The determination is usually made at the conclusion of the statutory audit.
The number and percentage of share rights that vested and the number and percentage of share rights that were forfeited relating to a performance period
which ended during the current financial year are set out below:
NAME
Executive Director
I Chalmers
FY2016 STI - Performance rights
Other Key Management Personnel
N Earner
FY2016 STI - Performance rights
M Ball
FY2016 STI - Performance rights
A N N U A L R E P O R T 2 0 1 6
VESTING
DATE
NUMBER
OF RIGHTS
GRANTED
% OF
SHARE
RIGHTS
VESTED
NUMBER
OF SHARE
RIGHTS
VESTED
% OF
SHARE
RIGHTS
NUMBER
OF SHARE
RIGHTS
FORFEITED
FORFEITED
18/08/2016
281,249
18/08/2016
309,375
18/08/2016
243,750
68
68
68
191,249
210,375
165,750
32
32
32
90,000
99,000
78,000
45
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I
N
F
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A
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I
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N
G
R
O
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P
O
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E
R
V
I
E
W
I
B
U
S
N
E
S
S
R
E
V
I
E
W
I
F
I
N
A
N
C
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
N
F
O
R
M
A
T
I
O
N
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
T
E
N
E
M
E
N
T
S
C
H
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D
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DIRECTOR S’ REPO RT CONTINUED
REMUNERATION REPORT (continued)
(j) DETAILS OF SHARE BASED PAYMENTS AND PERFORMANCE AGAINST KEY METRICS (continued)
The determination of the number of rights that are to vest or be forfeited is made by the Remuneration Committee after the statutory audit has been
substantially completed. As such, the actual determination was made after the balance date however details have been included in the current Remuneration
Report as the relevant performance period is the current financial year.
Performance against key metrics
The STI performance metrics for the year are detailed in section (d)(iii) of the Remuneration Report. The Remuneration Committee had determined that the STI
for the Key Management Personnel for the financial year ended 30 June 2016 be awarded as set out in the table below:
PERFORMANCE CATEGORY
PERFORMANCE METRICS AND ASSESSED OUTCOME
WEIGHTING
VESTED
Financial & operational
Growth
Sustainability
Production and operating cost performance targets for the
Tomingley Gold Operations met
Milestones relating to advancing the development of the
Dubbo Zirconia Project, with one exception, not met in the
required timeframe, with satisfactory execution of the Board
approved exploration plan to develop existing resources
Specific targets relating to the development of and compliance
with safety and environmental management systems, and
engagement with the local community were met
40%
40%
44%
12%
16%
16%
(k) SHAREHOLDINGS AND SHARE RIGHTS HELD BY KEY MANAGEMENT PERSONNEL
The number of shares in the Company and share rights for ordinary shares in the Company held by each Director and Key Management Personnel are set out
below.
Share holdings
30 JUNE 2016
Directors of Alkane Resources Ltd
Ordinary shares
J S F Dunlop
A D Lethlean
D I Chalmers
I J Gandel
Other Key Management Personnel
Ordinary shares
K E Brown
NUMBER OF ORDINARY SHARES
BALANCE
AT 1 JULY
2015
PURCHASED
RECEIVED ON
VESTING OF
/ (SOLD)
SHARE RIGHTS(1)
BALANCE AT
30 JUNE
2016
936,000
433,396
2,356,284
91,557,875
187,200
86,680
471,258
18,311,576
712,492
142,500
-
-
-
-
-
1,123,200
520,076
2,827,542
109,869,451
854,992
(1)
Does not include rights that vested post balance date. Refer to section (j) of the Remuneration Report for details.
46
A L K A N E R E S O U R C E S LT D
REMUNERATION REPORT (continued)
(k) SHAREHOLDINGS AND SHARE RIGHTS HELD BY KEY MANAGEMENT PERSONNEL (continued)
Share holdings (continued)
30 JUNE 2015
Directors of Alkane Resources Ltd
Ordinary shares
J S F Dunlop
A D Lethlean
D I Chalmers
I J Gandel
Other Key Management Personnel
Ordinary shares
K E Brown
L A Colless
L A Colless & K E Brown joint interest
NUMBER OF ORDINARY SHARES
BALANCE
AT 1 JULY
2014
PURCHASED
/ (SOLD)
RECEIVED ON
VESTING OF
SHARE RIGHTS
BALANCE AT
30 JUNE
2015
936,000
433,396
2,418,854
91,557,875
-
-
(62,570)
-
339,157
326,846
373,335
373,335
(326,846)
(373,335)
-
-
-
-
-
-
-
936,000
433,396
2,356,284
91,557,875
712,492
-
-
The shares previously held by L A Colless and K E Brown in joint interests are now 100% owned by K E Brown as a result of the passing of L A Colless in the
prior reporting period.
Share rights
Executive Director
D I Chalmers
Performance Rights
Share Appreciation Rights
Other Key Management Personnel
N Earner
Performance Rights
Share Appreciation Rights
M Ball
Performance Rights
Share Appreciation Rights
Total Performance Rights
Total Share Appreciation Rights
BALANCE
AT 1 JULY
2015
UNVESTED
RIGHTS
GRANTED
RIGHTS
VESTED
RIGHTS
LAPSED
BALANCE AT
30 JUNE
2016
UNVESTED
666,667
1,800,000
843,749
2,250,000
(191,249)
-
(90,000)
-
1,229,167
4,050,000
733,333
1,980,000
577,777
1,560,000
1,977,777
5,340,000
928,125
2,475,000
731,250
1,950,000
2,503,124
6,675,000
(210,375)
-
(165,750)
-
(567,374)
-
(99,000)
-
(78,000)
-
(267,000)
-
1,352,083
4,455,000
1,065,277
3,510,000
3,646,527
12,015,000
A N N U A L R E P O R T 2 0 1 6
47
C
O
M
P
A
N
Y
I
N
F
O
R
M
A
T
I
O
N
G
R
O
U
P
O
V
E
R
V
I
E
W
I
B
U
S
N
E
S
S
R
E
V
I
E
W
I
F
I
N
A
N
C
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
N
F
O
R
M
A
T
I
O
N
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
T
E
N
E
M
E
N
T
S
C
H
E
D
U
L
E
DIRECTOR S’ REPO RT CONTINUED
REMUNERATION REPORT (continued)
(k) SHAREHOLDINGS AND SHARE RIGHTS HELD BY KEY MANAGEMENT PERSONNEL (continued)
Share rights (continued)
Executive Directors
D I Chalmers
Performance Rights
Share Appreciation Rights
Other Key Management Personnel
N Earner
Performance Rights
Share Appreciation Rights
M Ball
Performance Rights
Share Appreciation Rights
Total Performance Rights
Total Share Appreciation Rights
BALANCE
AT 1 JULY
2014
UNVESTED
RIGHTS
GRANTED
RIGHTS
VESTED
RIGHTS
LAPSED
BALANCE AT
30 JUNE
2015
UNVESTED
-
-
-
-
-
-
-
-
1,000,000
1,800,000
1,099,999
1,980,000
866,665
1,560,000
2,966,664
5,340,000
-
-
-
-
-
-
-
-
(333,333)
-
666,667
1,800,000
(366,666)
-
(288,888)
-
(988,887)
-
733,333
1,980,000
577,777
1,560,000
1,977,777
5,340,000
The determination of the number of rights that are to vest or be forfeited is made by the Remuneration Committee after the statutory audit has been
substantially completed. As such, the actual determination was made after the balance date however details have been included in the current Remuneration
Report as the relevant performance period is the current financial year.
The information in this section has been audited with the rest of the remuneration report.
INDEMNIFICATION AND INSURANCE OF OFFICERS
Alkane Resources Ltd has entered into deeds of indemnity, access and insurance with each of the Directors. These deeds remain in effect as at the date of this
report. Under the deeds, the Company indemnifies each Director to the maximum extent permitted by law against legal proceedings or claims made against or
incurred by the Directors in connection with being a Director of the Company, or breach by the Group of its obligations under the deed.
The liability insured is the indemnification of the Group against any legal liability to third parties arising out of any Directors or officers duties in their capacity
as a Director or Officer other than indemnification not permitted by law.
No liability has arisen under this indemnity as at the date of this report.
The Group has not otherwise, during or since the financial year, indemnified nor agreed to indemnify an officer of the Group or of any related body corporate,
against a liability incurred as such by an officer.
During the year the Company has paid premiums in respect of Directors' and Executive Officers' Insurance. The contracts contain prohibitions on disclosure of
the amount of the premiums and the nature of the liabilities under the policies.
48
A L K A N E R E S O U R C E S LT D
NON-AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the
Group is important.
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for audit and non-audit services provided during the year are set out in note
19.
The Board of Directors' has considered the position and, in accordance with advice received from the Audit Committee, is satisfied that the provision of the
non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors' are satisfied
that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act
2001 for the following reasons:
(cid:1) all non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality and objectivity of the auditor
(cid:1) none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional
Accountants.
AUDITOR'S INDEPENDENCE DECLARATION
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 50.
ROUNDING OF AMOUNTS
The company has relied on the relief provided by the ‘ASIC Corporations (Rounding in Financial/Directors’ Report) Instrument 2016/191’, issued by the
Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the Directors’ report. Amounts in the Directors’ report have
been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.
This report is made in accordance with a resolution of Directors.
D I Chalmers
Director
Perth
26 August 2016
A N N U A L R E P O R T 2 0 1 6
49
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O
M
P
A
N
Y
I
N
F
O
R
M
A
T
I
O
N
G
R
O
U
P
O
V
E
R
V
I
E
W
I
B
U
S
N
E
S
S
R
E
V
I
E
W
I
F
I
N
A
N
C
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
N
F
O
R
M
A
T
I
O
N
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
T
E
N
E
M
E
N
T
S
C
H
E
D
U
L
E
AUD ITOR’S I NDEPENDENCE DECLARATION
50
A L K A N E R E S O U R C E S LT D
Financial statements
(cid:1) Consolidated statement of comprehensive income
(cid:1) Consolidated balance sheet
(cid:1) Consolidated statement of changes in equity
(cid:1) Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members
52
53
54
55
56
86
87
A N N U A L R E P O R T 2 0 1 6
51
C
O
M
P
A
N
Y
I
N
F
O
R
M
A
T
I
O
N
G
R
O
U
P
O
V
E
R
V
I
E
W
I
B
U
S
N
E
S
S
R
E
V
I
E
W
I
F
I
N
A
N
C
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
N
F
O
R
M
A
T
I
O
N
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
T
E
N
E
M
E
N
T
S
C
H
E
D
U
L
E
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
Continuing operations
Revenue
Cost of sales
Gross profit
Other net income/(expense)
Expenses
Other expenses
Finance charges
Total expenses
Profit/(Loss) before income tax
Income tax (expense)/benefit
Profit/(Loss) for the period after income tax
Total comprehensive profit/(loss) for the period
Total comprehensive profit/(loss) for the period is attributable to:
Owners of Alkane Resources Ltd
Profit/(Loss) is attributable to:
Owners of Alkane Resources Ltd
NOTES
2
3
4
3
5
YEAR ENDED
30 JUNE
2016
$'000
109,624
(95,351)
14,273
30 JUNE
2015
$'000
102,467
(101,366)
1,101
975
(654)
(8,149)
(436)
(8,585)
6,663
(1,968)
4,695
4,695
4,695
4,695
4,695
4,695
(8,211)
(373)
(8,584)
(8,137)
4,051
(4,086)
(4,086)
(4,086)
(4,086)
(4,086)
(4,086)
CENTS
CENTS
Profit/(Loss) per share attributable to the ordinary equity holders of the Company:
Basic profit/(loss) per share
Diluted profit/(loss) per share
20
20
1.1
1.1
(1.0)
(1.0)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
52
A L K A N E R E S O U R C E S LT D
CON SOLIDATED BALANCE SHEET
AS AT 30 JUNE 2016
ASSETS
Current assets
Cash and cash equivalents
Receivables
Inventories
Total current assets
Non-current assets
Exploration and evaluation
Property, plant and equipment
Other financial assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total equity
NOTES
6(a)
6(b)
7(a)
7(b)
7(c)
6(d)
6(e)
7(d)
5(d)
7(d)
8(a)
8(b)
8(c)
30 JUNE
2016
$'000
24,455
1,720
12,394
38,569
72,553
102,941
7,197
182,691
221,260
8,745
1,703
10,448
4,747
15,755
20,502
30,950
30 JUNE
2015
$'000
14,849
1,988
11,505
28,342
65,251
89,787
7,586
162,624
190,966
9,726
1,525
11,251
2,484
6,781
9,265
20,516
190,310
170,450
213,791
3,933
(27,414)
190,310
201,845
714
(32,109)
170,450
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
A N N U A L R E P O R T 2 0 1 6
53
C
O
M
P
A
N
Y
I
N
F
O
R
M
A
T
I
O
N
G
R
O
U
P
O
V
E
R
V
I
E
W
I
B
U
S
N
E
S
S
R
E
V
I
E
W
I
F
I
N
A
N
C
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
N
F
O
R
M
A
T
I
O
N
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
T
E
N
E
M
E
N
T
S
C
H
E
D
U
L
E
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
Balance at 1 July 2014
Loss for the year
Total comprehensive loss for the period
Transactions with owners in their capacity as owners:
Share issue transaction costs
Deferred tax credit recognised in equity
Share based payments
Balance at 30 June 2015
Balance at 1 July 2015
Profit for the year
Total comprehensive profit for the period
Transactions with owners in their capacity as owners:
Entitlement share issue
Share issue transaction costs
Deferred tax credit recognised in equity
Share based payments
Balance at 30 June 2016
SHARE
CAPITAL
$'000
202,243
-
-
(3)
(395)
-
(398)
201,845
201,845
-
-
12,388
(147)
(295)
-
213,791
ATTRIBUTABLE TO OWNERS OF ALKANE RESOURCES LTD
SHARE-BASED
ACCUMULATED
PAYMENTS
$'000
-
-
-
-
-
714
714
714
714
-
-
-
-
-
3,219
3,933
LOSSES
$'000
(28,023)
(4,086)
(4,086)
-
-
-
-
(32,109)
(32,109)
4,695
4,695
-
-
-
-
(27,414)
TOTAL
EQUITY
$'000
174,220
(4,086)
(4,086)
(3)
(395)
714
316
170,450
170,450
4,695
4,695
12,388
(147)
(295)
3,219
190,310
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
54
A L K A N E R E S O U R C E S LT D
CON SOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees (inclusive of GST)
Interest received
Finance costs paid
Royalties and selling costs
Other receipts
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Proceeds from sale of available-for-sale financial assets
Payments for exploration expenditure
Payments for security deposits
Refund of security deposits
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Cost of share issue
Proceeds from borrowings
Repayment of borrowings
Net cash inflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at end of year
YEAR ENDED
30 JUNE
2016
$'000
109,134
(70,051)
490
(248)
(2,819)
980
37,486
(33,634)
26
-
(6,789)
(2,151)
2,541
(40,007)
12,388
(147)
4,000
(4,114)
12,127
9,606
14,849
24,455
30 JUNE
2015
$'000
101,941
(71,222)
526
(145)
(2,825)
332
28,607
(18,103)
-
4,001
(14,485)
(4,010)
3,160
(29,437)
-
(3)
165
(52)
110
(720)
15,569
14,849
NOTES
9(a)
8(a)
8(a)
6(a)
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
A N N U A L R E P O R T 2 0 1 6
55
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O
M
P
A
N
Y
I
N
F
O
R
M
A
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I
O
N
G
R
O
U
P
O
V
E
R
V
I
E
W
I
B
U
S
N
E
S
S
R
E
V
I
E
W
I
F
I
N
A
N
C
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
N
F
O
R
M
A
T
I
O
N
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
T
E
N
E
M
E
N
T
S
C
H
E
D
U
L
E
NOTE S TO THE CO NSO LI DATED FINANCIAL STATEMENTS
30 JUNE 2016
CONTENTS OF THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
How numbers are calculated
1
2
3
4
5
6
7
8
9
Risk
10
11
12
Segment information
Revenue
Expenses
Other income and expense items
Income tax
Financial assets and financial liabilities
Non-financial assets and liabilities
Equity
Cash flow information
Critical accounting estimates and judgements
Financial risk management
Capital risk management
Unrecognised items
13
14
15
Contingent liabilities and contingent assets
Commitments
Events occurring after the reporting period
Other information
Interests in other entities
Related party transactions
Share-based payments
Remuneration of auditors
Earnings per share
Assets pledged as security
Parent entity financial information
Summary of significant accounting policies
16
17
18
19
20
21
22
23
56
Page
57
58
59
59
60
60
63
65
70
71
72
72
73
74
75
75
75
76
77
77
77
78
80
80
80
81
82
A L K A N E R E S O U R C E S LT D
HOW NUMBERS ARE CALCULATED
This section provides additional information about those individual line items in the financial statements that the directors consider
most relevant in the context of the activities of the entity, including:
(a) accounting policies that are relevant for an understanding of the items recognised in the financial statements. These cover
situations where the accounting standards either allow a choice or do not deal with a particular type of transaction.
(b) analysis and sub-totals, including segment information.
(c) information about estimates and judgements made in relation to particular items.
1
2
3
4
5
6
7
8
9
Segment information
Revenue
Expenses
Other income and expense items
Income tax
Financial assets and financial liabilities
Non-financial assets and liabilities
Equity
Cash flow information
58
59
59
60
60
63
65
70
71
A N N U A L R E P O R T 2 0 1 6
57
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O
M
P
A
N
Y
I
N
F
O
R
M
A
T
I
O
N
G
R
O
U
P
O
V
E
R
V
I
E
W
I
B
U
S
N
E
S
S
R
E
V
I
E
W
I
F
I
N
A
N
C
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
N
F
O
R
M
A
T
I
O
N
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
T
E
N
E
M
E
N
T
S
C
H
E
D
U
L
E
NOTE S TO THE CO NSO LI DATED FINANCIAL STATEMENTS C O N T I N U E D
30 JUNE 2016
1
SEGMENT INFORMATION
(a) SEGMENT RESULTS
The Board of Alkane Resources Ltd has identified two reportable segments, being gold operations and the exploration and evaluation of rare metals.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker that are used to make
strategic decisions.
Costs that do not relate to either of the operating segments, have been identified as unallocated costs. Corporate assets and liabilities that do not relate
to either of the operating segments have been identified as unallocated. The Group has formed a tax consolidation group and therefore tax balances have
been allocated to the unallocated grouping.
30 JUNE 2016
Gold sales to external customers
Interest income
Total segment revenue
GOLD
OPERATIONS
$'000
RARE
METALS
$'000
UNALLOCATED
$'000
GROUP
$'000
109,134
257
109,391
-
-
-
-
233
233
109,134
490
109,624
Segment net profit/(loss) before income tax
14,304
(264)
(7,377)
6,663
Segment net profit/(loss) includes the
following non-cash adjustments:
Depreciation and amortisation
Deferred stripping costs capitalised
Exploration expenditure written off or provided for
Inventory product movement and provision
Income tax expense
Total non-cash adjustments
Total segment assets
Total segment liabilities
Net segment assets
30 JUNE 2015
Gold sales to external customers
Interest income
Total segment revenue
(29,929)
15,740
-
424
-
(13,765)
110,964
(24,194)
86,770
101,941
338
102,279
-
-
(17)
-
-
(17)
93,207
(1,014)
92,193
-
-
-
(260)
-
(99)
-
(1,968)
(2,327)
17,089
(5,742)
11,347
-
188
188
(30,189)
15,740
(116)
424
(1,968)
(16,109)
221,260
(30,950)
190,310
101,941
526
102,467
Segment net profit/(loss) before income tax
589
(310)
(8,416)
(8,137)
Segment net profit / (loss) includes the
following non-cash adjustments :
Depreciation and amortisation
Deferred stripping costs capitalised
Exploration expenditure written off or provided for
Inventory product movement and provision
Income tax benefit
Total non-cash adjustments
Total segment assets
Total segment liabilities
Net segment assets
(26,557)
11,012
-
(4,703)
-
(20,248)
104,630
(16,151)
88,479
-
-
-
-
-
-
73,444
(689)
72,755
(172)
-
(1,071)
-
4,051
2,808
12,892
(3,676)
9,216
(26,729)
11,012
(1,071)
(4,703)
4,051
(17,440)
190,966
(20,516)
170,450
58
A L K A N E R E S O U R C E S LT D
2
REVENUE
Revenue from continuing operations
Gold sales
Other revenue
Interest income
Total revenue
YEAR ENDED
30 JUNE
2016
$'000
30 JUNE
2015
$'000
109,134
101,941
490
109,624
526
102,467
Revenue is measured at the fair value of the consideration received or receivable. The Group recognises revenue when the amount of revenue can be
reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met where applicable.
(a) GOLD SALES
Revenue from gold sales is recognised where there has been a transfer of risks and rewards from the Group to an external party, no further
processing is required by the Group, quality and quantity has been determined with reasonable accuracy and collectability is probable.
(b)
INTEREST INCOME
Interest is recognised as it is accrued using the effective interest method.
3
EXPENSES
Cost of sales
Cash costs of production
Deferred stripping costs capitalised
Inventory product movement
Inventory product provision net realisable value
Depreciation and amortisation
Royalties and selling costs
Share based payments
Other expenses
Corporate administration
Employee remuneration and benefits expensed
Share based payments
Professional fees and consulting services
Exploration expenditure provided for or written off
Directors' fees and salaries expensed
Peak Hill site maintenance and rehabilitation
Depreciation
(a) CASH COSTS OF PRODUCTION
YEAR ENDED
30 JUNE
2016
$'000
76,236
(15,740)
(601)
177
29,929
3,251
2,099
95,351
2,242
2,172
1,120
1,572
116
580
87
260
8,149
30 JUNE
2015
$'000
78,215
(11,012)
2,857
1,847
26,557
2,902
-
101,366
1,995
2,395
272
1,481
1,071
704
121
172
8,211
Cash costs of production include ore and waste mining costs, processing costs and site administration and support costs. Cash costs of
production include $18,238,000 of employee remuneration and benefits (2015: $17,026,000).
A N N U A L R E P O R T 2 0 1 6
59
C
O
M
P
A
N
Y
I
N
F
O
R
M
A
T
I
O
N
G
R
O
U
P
O
V
E
R
V
I
E
W
I
B
U
S
N
E
S
S
R
E
V
I
E
W
I
F
I
N
A
N
C
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
N
F
O
R
M
A
T
I
O
N
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
T
E
N
E
M
E
N
T
S
C
H
E
D
U
L
E
NOTE S TO THE CO NSO LI DATED FINANCIAL STATEMENTS C O N T I N U E D
30 JUNE 2016
3
EXPENSES (continued)
(b) DEFERRED STRIPPING COSTS CAPITALISED
Stripping costs capitalised represent the costs incurred in the development and production phase of a mine and are capitalised as part of the cost of
constructing the mine and subsequently amortised over the useful life of the ore body that access is provided to on a units-of-production basis.
Refer to note 7(c)(i) for further detail on the Group's accounting policy for deferred stripping costs.
(c)
INVENTORY PRODUCT MOVEMENT
Inventory product movement represents the movement in balance sheet inventory of ore stockpiles, gold in circuit and bullion on hand.
Refer to note 7(a)(i) for further details on the Group's accounting policy for inventory.
(d)
INVENTORY PRODUCT PROVISION FOR NET REALISABLE VALUE
Inventories must be carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of
business less the estimated costs to complete processing and to make a sale. The net realisable value provision equals the decrement between the net
realisable value and the carrying value before provision.
Refer to note 7(a)(i) for further details on the Group's accounting policy for inventory.
4
OTHER INCOME AND EXPENSE ITEMS
(a) OTHER GAINS/(LOSSES)
Other net income/(expense)
Loss on sale of available-for-sale assets
Net foreign exchange gains/(losses)
Loss on disposal of non-current assets
Other income
YEAR ENDED
30 JUNE
2016
$'000
30 JUNE
2015
$'000
-
8
(13)
980
975
(948)
(8)
(33)
335
(654)
The other income includes the sale of water available under certain owned water licences of $211,000 (2015: $168,000) as well as NSW government
payroll tax rebate under the Job Actions Plan $587,000 (2015: $24,000).
5
INCOME TAX
(a)
INCOME TAX EXPENSE / (BENEFIT)
Current tax benefit
Deferred tax expense/(benefit)
Total income tax expense/(benefit)
YEAR ENDED
30 JUNE
2016
$'000
-
1,968
1,968
30 JUNE
2015
$'000
(630)
(3,421)
(4,051)
The Group intends to lodge a research and development claim for activities performed during the year with the income tax return. The tax balances
(income tax expense and net deferred tax liability) in the financial statements includes an estimation of the benefit for such a claim as the review of
activities performed and expenditures made has progressed sufficiently to allow a reliable estimate of the amount of the claim.
60
A L K A N E R E S O U R C E S LT D
5
INCOME TAX (continued)
(b) RECONCILIATION OF INCOME TAX EXPENSE/(BENEFIT) TO PRIMA FACIE TAX PAYABLE
YEAR ENDED
Profit/(Loss) before income tax expense
Tax at the Australian tax rate of 30.0% (2015 - 30.0%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Utilisation of previously unrecognised tax losses
Tax benefits of deductible equity raising costs
Research and development tax incentive
Non-deductible share based payments
Other items
Subtotal
Income tax expense/(benefit)
(c) DEFERRED TAX ASSETS
The balance comprises temporary differences attributable to:
Tax losses
Research and development tax incentive
Capital raising and future blackhole deductions
Property, plant and equipment
Other
Total deferred tax assets
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax assets
30 JUNE
2016
$'000
6,663
1,999
(169)
(339)
(526)
966
37
(31)
1,968
30 JUNE
2016
$'000
705
3,506
144
10,828
1,838
17,021
(17,021)
-
30 JUNE
2015
$'000
(8,137)
(2,441)
(690)
(395)
(640)
81
34
(1,610)
(4,051)
30 JUNE
2015
$'000
2,898
1,919
436
10,148
1,710
17,111
(17,111)
-
MOVEMENTS
At 1 July 2014
Charged/(credited)
-
-
At 30 June 2015
to profit or loss
directly to equity
At 1 July 2015
Charged/(credited)
-
-
At 30 June 2016
to profit or loss
directly to equity
CAPITAL RAISING
AND FUTURE
BLACKHOLE
DEDUCTIONS
$'000
PROPERTY,
PLANT AND
EQUIPMENT
$'000
R&D TAX
INCENTIVE
CREDITS
$'000
OTHER
$'000
TOTAL
$'000
855
(25)
(395)
435
8,457
1,691
-
10,148
435
10,148
4
(295)
144
680
-
10,828
-
931
11,575
1,919
-
1,919
1,919
1,587
-
3,506
780
-
1,711
1,711
127
-
1,838
5,931
(395)
17,111
17,111
205
(295)
17,021
TAX LOSSES
$'000
1,332
1,566
-
2,898
2,898
(2,193)
-
705
A N N U A L R E P O R T 2 0 1 6
61
C
O
M
P
A
N
Y
I
N
F
O
R
M
A
T
I
O
N
G
R
O
U
P
O
V
E
R
V
I
E
W
I
B
U
S
N
E
S
S
R
E
V
I
E
W
I
F
I
N
A
N
C
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
N
F
O
R
M
A
T
I
O
N
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
T
E
N
E
M
E
N
T
S
C
H
E
D
U
L
E
NOTE S TO THE CO NSO LI DATED FINANCIAL STATEMENTS C O N T I N U E D
30 JUNE 2016
5
INCOME TAX (continued)
(d) DEFERRED TAX LIABILITIES
The balance comprises temporary differences attributable to:
Exploration expenditure
Other
Total deferred tax liabilities
Set-off of deferred tax assets
Net recognised deferred tax liabilities
MOVEMENTS
At 1 July 2014
Charged/(credited)
-
At 30 June 2015
to profit or loss
At 1 July 2015
Charged/(credited)
-
At 30 June 2016
to profit or loss
(e) DEFERRED TAX RECOGNISED DIRECTLY IN EQUITY
Relating to equity raising costs
(f)
TAX LOSSES
EXPLORATION
AVAILABLE-FOR-SALE
EXPENDITURE
FINANCIAL ASSETS
$'000
15,676
3,899
19,575
19,575
2,191
21,766
$'000
1,208
(1,208)
-
-
-
-
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at 30.0% (2015: 30%)
Potential tax benefit of other unrecognised temporary differences at 30% (2015: 30%)
30 JUNE
2016
$'000
(21,766)
(2)
(21,768)
17,021
(4,747)
OTHER
$'000
201
(181)
20
20
(18)
2
30 JUNE
2016
$'000
295
30 JUNE
2016
$'000
20,602
6,181
44
30 JUNE
2015
$'000
(19,575)
(20)
(19,595)
17,111
(2,484)
TOTAL
$'000
17,085
2,510
19,595
19,595
2,173
21,768
30 JUNE
2015
$'000
395
30 JUNE
2015
$'000
21,166
6,350
-
The potential benefit of carried forward tax losses will only be obtained if taxable income is derived of a nature and amount sufficient to enable the
benefit from the deductions to be realised. In accordance with the Group’s policies for deferred taxes, a deferred tax asset is recognised only if it is
probable that sufficient future taxable income will be generated to offset against the asset.
Determination of future taxable profits requires estimates and assumptions as to future events and circumstances including commodity prices, ore
resources, exchange rates, future capital requirements, future operational performance, the timing of estimated cash flows, the ability to successfully
develop and commercially exploit resources.
Tax legislation prescribes the rate at which tax losses transferred from entities joining a tax consolidation group can be applied to taxable incomes and
this rate is diluted by changes in ownership, including capital raisings. As a result the reduction in the rate at which the losses can be applied to future
taxable incomes, the period of time over which it is forecast that these losses may be utilised has extended beyond that which management considers
prudent to support their continued recognition for accounting purposes. Accordingly no deferred tax asset has been recognised for certain tax losses.
Recognition for accounting purposes does not impact the ability of the Group to utilise the losses to reduce future taxable profits.
62
A L K A N E R E S O U R C E S LT D
5
INCOME TAX (continued)
(f)
TAX LOSSES (continued)
Alkane Resources Ltd and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a consequence, these
entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the consolidated financial statements.
6
FINANCIAL ASSETS AND FINANCIAL LIABILITIES
This note provides information about the Group's financial instruments, including:
(cid:1) an overview of all financial instruments held by the Group;
(cid:1) specific information about each type of financial instrument;
(cid:1) accounting policies; and
(cid:1) information about determining the fair value of the instruments, including judgements and estimation uncertainty involved.
The financial assets are presented as current assets as management intends to dispose of them within 12 months of the end of the reporting period
excluding other financial assets which are non current assets.
Financial assets at amortised cost
Cash and cash equivalents
Receivables
Other financial assets
30 JUNE
2016
$'000
24,455
273
7,197
31,925
The receivables balance above excludes prepayments and tax receivable balances which do not meet the definition of financial assets.
30 JUNE
2016
$'000
NOTES
30 JUNE
2015
$'000
14,849
353
7,586
22,788
30 JUNE
2015
$'000
Financial liabilities at amortised cost
Trade and other payables
(a) CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Cash at bank at balance date bore a weighted average interest rate of 0.9% (2015: 1.4%).
(i)
Classification as cash and cash equivalents
6(e)
8,745
9,726
30 JUNE
2016
$'000
24,455
30 JUNE
2015
$'000
14,849
Cash and cash equivalents include cash on hand and deposits held at call with financial institutions and other short-term, highly liquid investments
with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk
of changes in value.
(b) RECEIVABLES
Prepayments
GST and fuel tax credit receivable
Other receivables
A N N U A L R E P O R T 2 0 1 6
30 JUNE
2016
$'000
849
847
24
1,720
30 JUNE
2015
$'000
552
1,386
50
1,988
63
C
O
M
P
A
N
Y
I
N
F
O
R
M
A
T
I
O
N
G
R
O
U
P
O
V
E
R
V
I
E
W
I
B
U
S
N
E
S
S
R
E
V
I
E
W
I
F
I
N
A
N
C
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
N
F
O
R
M
A
T
I
O
N
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
T
E
N
E
M
E
N
T
S
C
H
E
D
U
L
E
NOTE S TO THE CO NSO LI DATED FINANCIAL STATEMENTS C O N T I N U E D
30 JUNE 2016
6
FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
(b) RECEIVABLES (continued)
(i)
Classification as receivables
Other receivables generally arise from transactions outside the usual operating activities of the Group. Collateral is not normally obtained.
Receivables are recognised initially at fair value and then subsequently measured at amortised cost, less provision for impairment. If collection of
the amounts is expected in one year or less they are classified as current assets, if not, they are presented as non-current assets.
Collectability of receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off. A provision for impairment
is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of
receivables. The amount of the provision is recognised in the statement of comprehensive income.
(ii) Fair value of receivables
Due to the short-term nature of the current receivables, their carrying amount is assumed to be the same as their fair value.
(iii)
Impairment and risk exposure
Information about the impairment of receivables, their credit quality and the Group’s exposure to credit risk, foreign currency risk and interest rate
risk can be found in note 11.
(c) AVAILABLE-FOR-SALE FINANCIAL ASSETS
Listed equity securities
Opening balance at beginning of period
Disposals during the period
Closing balance at end of period
YEAR ENDED
30 JUNE
2016
$'000
-
-
-
30 JUNE
2015
$'000
4,945
(4,945)
-
(i) Classification of financial assets as available-for-sale
Investments are designated as available-for-sale financial assets if they do not have fixed maturities and fixed or determinable payments. Financial
assets that are not classified into any of the other categories (at fair value through profit and loss, loans and receivables or held-to-maturity
investments) are also included in the available-for-sale category.
Movements in available-for-sale assets are recognised in other comprehensive income, except where assets are deemed to be impaired, in which
case they are recognised through profit and loss.
(d) OTHER FINANCIAL ASSETS
Non-current assets
Interest bearing security deposits
30 JUNE
2016
$'000
30 JUNE
2015
$'000
7,197
7,586
The above deposits are held by financial institutions or regulatory bodies as security for rehabilitation obligations as required under the respective
exploration and mining leases or as required under agreement. In the prior year, $2,000,000 was provided to a financial institution as security for
hedging facilities for subsidiary Tomingley Gold Operations Pty Ltd. During the year a new hedging facility was secured and the security was returned.
Refer to note 21 for details of assets pledged as security.
All interest bearing security deposits are held in Australian dollars and therefore there is no exposure to foreign currency risk. Please refer to note 11(a)
for the Group's exposure to interest rate risk. The fair value of other financial assets is equal to its carrying value.
64
A L K A N E R E S O U R C E S LT D
6
FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
(e) TRADE AND OTHER PAYABLES
Current liabilities
Trade payables
Other payables
30 JUNE
2016
$'000
2,647
6,098
8,745
30 JUNE
2015
$'000
6,235
3,491
9,726
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial period which are unpaid.
Current trade and other payables are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented in current
liabilities unless payment is not due within 12 months from the reporting date.
The carrying amounts of trade and other payables are assumed to be the same as their fair values, due to their short-term nature.
Income tax payable does not meet the definition of a financial liability, however has been presented with other payable balances in this table.
7 NON-FINANCIAL ASSETS AND LIABILITIES
This note provides information about the Group's non-financial assets and liabilities, including:
(cid:1) specific information about each type of non-financial asset and non-financial liability
-
-
-
-
inventories (note 7(a))
exploration and evaluation (note 7(b))
property, plant and equipment (note 7(c))
provisions (note 7(d))
(cid:1) accounting policies for the above assets and liabilities
(cid:1) information about determining the fair value of the assets and liabilities, including judgements and estimation uncertainty involved.
(a)
INVENTORIES
Current assets
Ore stockpiles
Gold in circuit
Bullion on hand
Consumable stores
30 JUNE
2016
$'000
3,450
2,359
4,713
1,872
12,394
30 JUNE
2015
$'000
1,653
3,755
4,690
1,407
11,505
(i)
Assigning costs to inventories
The cost of individual items of inventory are determined using weighted average costs. Cost comprises direct materials, direct labour and an
appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are
assigned to ore stockpiles, gold in circuit and bullion on hand on the basis of weighted average costs. Inventories must be carried at the lower of
cost and net realisable value. At balance date ore stockpiles, gold in circuit and bullion on hand were carried at net realisable value, with
consumable stores carried at cost (2015: ore stockpiles, gold in circuit and bullion on hand were carried at net realisable value, with consumable
stores carried at cost).
A provision of $2,016,000 was recorded at 30 June 2016 to write down inventories to their recoverable value (2015: $1,847,000). The movement
in the provision of $169,000 (2015: $1,847,000) was recognised as an expense during the year and included in cost of sales in the statement of
comprehensive income.
Consumable stores include diesel, explosives and other consumables items.
A N N U A L R E P O R T 2 0 1 6
65
C
O
M
P
A
N
Y
I
N
F
O
R
M
A
T
I
O
N
G
R
O
U
P
O
V
E
R
V
I
E
W
I
B
U
S
N
E
S
S
R
E
V
I
E
W
I
F
I
N
A
N
C
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
N
F
O
R
M
A
T
I
O
N
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
T
E
N
E
M
E
N
T
S
C
H
E
D
U
L
E
NOTE S TO THE CO NSO LI DATED FINANCIAL STATEMENTS C O N T I N U E D
30 JUNE 2016
7 NON-FINANCIAL ASSETS AND LIABILITIES (continued)
(b) EXPLORATION AND EVALUATION
Opening balance at beginning of period
Expenditure during the period
Amounts provided for or written off
Closing balance end of period
30 JUNE
2016
$'000
65,251
7,418
(116)
72,553
30 JUNE
2015
$'000
53,406
12,916
(1,071)
65,251
Exploration and evaluation costs are carried forward on an area of interest basis. Costs are recognised and carried forward where rights to tenure of the
area of interest are current and either:
(cid:1) the expenditures are expected to be recouped through successful development and exploitation of the area of interest; or
(cid:1) activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise
of economically recoverable reserves, and active and significant exploration and evaluation activities in, or in relation to, the area of interest are
continuing.
Exploration and evaluation assets are tested for impairment when reclassified to development tangible or intangible assets, or whenever facts or
circumstances indicate impairment. An impairment loss is recognised for the amount by which the exploration and evaluation assets carrying amount
exceeds their recoverable amount. The recoverable amount is the higher of the exploration and evaluation assets fair value less costs to sell and their
value in use.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and
evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mine properties under development. No
amortisation is charged during the exploration and evaluation phase.
Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or
alternatively, sale of the respective areas of interest.
There may exist, on the Group's exploration properties, areas subject to claim under native title or containing sacred sites or sites of significance to
Aboriginal people. As a result, exploration properties or areas within tenements may be subject to exploration or mining restrictions.
(c) PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED 30 JUNE 2016
Opening cost
Additions
Transfers between classes
Disposals
Net movement
LAND AND
BUILDINGS
$'000
PLANT AND
EQUIPMENT
$'000
25,660
-
13,956
-
13,956
70,006
-
2,266
(68)
2,198
CAPITAL
WIP
$'000
819
17,196
(17,307)
-
(111)
MINE
PROPERTIES
$'000
83,011
26,186
1,085
-
27,271
TOTAL
$'000
179,496
43,382
-
(68)
43,314
Closing cost
39,616
72,204
708
110,282
222,810
Opening accumulated depreciation and impairment
Depreciation charge
Disposals
Net movement
(6,072)
(1,589)
-
(1,589)
(35,752)
(9,953)
29
(9,924)
Closing accumulated depreciation and impairment
(7,661)
(45,676)
-
-
-
-
-
(47,885)
(18,647)
-
(18,647)
(89,709)
(30,189)
29
(30,160)
(66,532)
(119,869)
Closing net carrying value
31,955
26,528
708
43,750
102,941
66
A L K A N E R E S O U R C E S LT D
7 NON-FINANCIAL ASSETS AND LIABILITIES (continued)
(c) PROPERTY, PLANT AND EQUIPMENT (continued)
YEAR ENDED 30 JUNE 2015
Opening cost
Additions
Disposals
Transfers between classes
Net movement
Closing cost
Opening accumulated depreciation and impairment
Depreciation charge
Disposals
Net movement
LAND AND
BUILDINGS
$'000
PLANT AND
EQUIPMENT
$'000
24,737
523
-
400
923
25,660
(4,310)
(1,762)
-
(1,762)
67,449
132
(53)
2,478
2,557
70,006
(25,019)
(10,738)
5
(10,733)
Closing accumulated depreciation and impairment
(6,072)
(35,752)
CAPITAL
WIP
$'000
458
4,688
-
(4,327)
361
MINE
PROPERTIES
$'000
70,373
11,189
-
1,449
12,638
TOTAL
$'000
163,017
16,532
(53)
-
16,479
819
83,011
179,496
-
-
-
-
-
(33,656)
(14,229)
-
(14,229)
(62,985)
(26,729)
5
(26,724)
(47,885)
(89,709)
Closing net carrying value
19,588
34,254
819
35,126
89,787
All property, plant and equipment is stated at historical cost less accumulated depreciation and impairment charges. Historical cost includes:
(cid:1) expenditure that is directly attributable to the acquisition of the items;
(cid:1) direct costs associated with the commissioning of plant and equipment including pre-commissioning costs in testing the processing plant;
(cid:1) where the asset has been constructed by the Group, the cost of all materials used in construction, direct labour on the project and project
management costs associated with the asset; and
(cid:1) the present value of the estimated costs of dismantling and removing the asset and restoring the site on which it is located.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any
component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the
reporting period in which they are incurred. Depreciation is calculated using the straight-line method to allocate their cost over their estimated useful
lives as follows:
(cid:1) Buildings
(cid:1) Plant and equipment
(cid:1) Mining properties
(cid:1) Office equipment
(cid:1) Furniture and fittings
(cid:1) Motor vehicles
(cid:1) Software
units of production
units of production
units of production
2 - 3 years
4 - 5 years
3 - 5 years
4 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable
amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the statement of comprehensive
income.
A N N U A L R E P O R T 2 0 1 6
67
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V
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W
I
B
U
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N
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S
S
R
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V
I
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W
I
F
I
N
A
N
C
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
N
F
O
R
M
A
T
I
O
N
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
T
E
N
E
M
E
N
T
S
C
H
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D
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NOTE S TO THE CO NSO LI DATED FINANCIAL STATEMENTS C O N T I N U E D
30 JUNE 2016
7 NON-FINANCIAL ASSETS AND LIABILITIES (continued)
(c) PROPERTY, PLANT AND EQUIPMENT (continued)
(i)
Deferred stripping costs capitalised
Overburden and other mine waste materials removed during the initial development of an open pit mine in order to access the mineral deposit is
referred to as development stripping. Costs directly attributable to development stripping inclusive of an allocation of relevant overhead
expenditure, are capitalised as a non-current asset in mine properties. Capitalisation of development stripping costs cease at the time that ore
begins to be extracted from the mine. Development stripping costs are amortised over the useful life of the ore body that access has been provided
to on a units of production basis.
Production stripping commences at the time that ore begins to be extracted from the mine and normally continues throughout the life of a mine.
The costs of production stripping are charged to the income statement as operating costs, when the current ratio of waste material to ore extracted
for a component of the ore body is below the expected stripping ratio of that component. When the ratio of waste to ore is not expected to be
constant, production stripping costs are accounted for as follows:
(cid:1) all costs are initially charged to profit or loss and classified as operating costs;
(cid:1) when the current ratio of waste to ore is greater than the estimated ratio of a component of the ore body, a portion of the stripping costs,
inclusive of an allocation of relevant overhead expenditure, is capitalised to mine properties; and
(cid:1) the capitalised stripping asset is amortised over the useful life of the ore body to which access has been improved.
The amount of production stripping costs capitalised or charged in a reporting period is determined so that the stripping expense for the period
reflects the estimated strip ratio of the ore component. Changes to the estimated waste to ore ratio of a component of the ore body are accounted
for prospectively from the date of change. Deferred stripping capitalised is included in mine properties.
(ii) Mine properties
Mine properties represent the accumulation of all exploration, evaluation and development expenditure incurred by the Group in relation to areas of
interest for which the technical feasibility and commercial viability of the extraction of mineral resources are demonstrable.
When further development expenditure is incurred in respect of a mine property after the commencement of production, such expenditure is carried
forward as part of the mine property only when it is probable that the additional future economic benefits associated with the expenditure will flow
to the Group. Otherwise such expenditure is classified as part of the cost of production. Mine properties are amortised on a units of production
basis over the economically recoverable resources of the mine concerned. The unit of account is tonnes milled for mine properties other than
capitalised deferred stripping costs (refer note 7(c)(i)).
Refer to note 23 for the Group's accounting policy in relation to impairment of non-current assets.
(d) PROVISIONS
Employee benefits
Rehabilitation
(i)
Provisions
CURRENT
$'000
1,703
-
1,703
30 JUNE 2016
NON-CURRENT
$'000
422
15,333
15,755
TOTAL
$'000
2,125
15,333
17,458
CURRENT
$'000
1,525
-
1,525
30 JUNE 2015
NON-CURRENT
$'000
229
6,552
6,781
TOTAL
$'000
1,754
6,552
8,306
Provisions are recognised when the Group has a present legal or constructive obligation, it is probable that an outflow of resources will be required
to settle the obligation, and the amount can be reliably estimated.
Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end
of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised in finance charges.
68
A L K A N E R E S O U R C E S LT D
7 NON-FINANCIAL ASSETS AND LIABILITIES (continued)
(d) PROVISIONS (continued)
(ii)
Information about individual provisions and significant estimates Employee benefits
The provision for employee benefits relates to the Group's liability for long service leave and annual leave.
The current provision represents amounts for annual leave that are expected to be settled within 12 months of the end of the period in which the
employees render the related service in respect of employees' services up to the reporting date and are measured at the amounts expected to be
paid when the liabilities are settled.
Vested long service leave for which the Group does not have an unconditional right to defer settlement, regardless of when the actual settlement is
expected to occur is presented in current provisions.
The liability for long service leave not expected to vest within 12 months after the end of the period in which the employees render the related
service is recognised in the non-current provision for employee benefits and measured at the present value of expected future payments to be
made in respect of services provided up to the end of the reporting period. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting
period on corporate bonds with terms and currencies that match as closely as possible, the estimated future cash outflows. Where the Group does
not have an unconditional right to defer settlement for any annual or long service leave owed, it is classified as a current provision regardless of
when the Group expects to realise the provision.
Rehabilitation and mine closure
The Group has obligations to dismantle and remove certain items of property, plant and equipment and to restore and rehabilitate the land on which
they sit.
A provision is raised for the estimated cost of settling the rehabilitation and restoration obligations existing at balance date, discounted to present
value using an appropriate pre-tax discount rate.
Where the obligation is related to an item of property, plant and equipment, its cost includes the present value of the estimated costs of
dismantling and removing the asset and restoring the site on which it is located. Costs that relate to obligations arising from waste created by the
production process are recognised as production costs in the period in which they arise.
The discounted value reflects a combination of management's assessment of the nature and extent of the work required, the future cost of
performing the work required, the timing of cash flows and the discount rate. The increase in the provision due to the passage of time of $188,000
(2015: $229,000) was recognised in finance charges in the statement of comprehensive income.
The provisions are reassessed at least annually. A change in any of the assumptions used to determine the provisions could have a material impact
on the carrying value of the provision.
(iii) Movements in provisions
Movements in rehabilitation and mine closure provisions during the financial year are set out below:
Rehabilitation and mine closure
Carrying amount at the start of the year
Amounts utilised during the year
Additional provision incurred
Unwinding of discount
Change in estimate
Carrying amount at end of period
30 JUNE
2016
$'000
6,552
(1,113)
8,011
188
1,695
15,333
30 JUNE
2015
$'000
6,418
(88)
-
229
(7)
6,552
A N N U A L R E P O R T 2 0 1 6
69
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V
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W
I
B
U
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N
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S
S
R
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V
I
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W
I
F
I
N
A
N
C
A
L
R
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P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
N
F
O
R
M
A
T
I
O
N
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
T
E
N
E
M
E
N
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S
C
H
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D
U
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NOTE S TO THE CO NSO LI DATED FINANCIAL STATEMENTS C O N T I N U E D
30 JUNE 2016
8
EQUITY
(a) CONTRIBUTED EQUITY
Ordinary shares - fully paid
8(a)(ii)
476,159,490
414,218,670
213,791
201,845
30 JUNE
2016
SHARES
30 JUNE
2015
SHARES
30 JUNE
2016
$'000
30 JUNE
2015
$'000
NOTES
(ii) Movements in ordinary share capital
DETAILS
Opening balance 1 July 2014
Employee share scheme issue
Less: Transaction costs arising on share issue
Deferred tax credit recognised directly in equity
Balance 30 June 2015
Opening balance 1 July 2015
Entitlement share issue
Less: Transaction costs arising on share issue
Deferred tax credit recognised directly in equity
Balance 30 June 2016
NUMBER OF
SHARES
412,639,000
1,579,670
414,218,670
-
-
414,218,670
414,218,670
61,940,820
476,159,490
-
-
476,159,490
$'000
202,243
-
202,243
(3)
(395)
201,845
201,845
12,388
214,233
(147)
(295)
213,791
During the year the Company undertook a one for five non-renounceable entitlement issue at an issue price of $0.20 per new share. The offer
closed on 23 May 2016 raising $12,388,000 (before costs) and resulting in the issue of 61,940,820 new shares. The shortfall of 20,707,196
shares was placed to a number of institutional and professional investors on 7 July 2016 raising $4,141,000 (before costs).
(iii) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and
amounts paid on the shares held.
Every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one
vote. Ordinary shares have no par value.
(b) RESERVES
Share-based payments
The share-based payments reserve is used to recognise:
(cid:1) the grant date fair value of shares issued to employees
(cid:1) the grant date fair value of deferred rights granted to employees but not yet vested
(c) ACCUMULATED LOSSES
Movements in accumulated losses were as follows:
Opening balance
Net profit/(loss) for the period
Closing balance
30 JUNE
2016
$'000
(32,109)
4,695
(27,414)
30 JUNE
2015
$'000
(28,023)
(4,086)
(32,109)
70
A L K A N E R E S O U R C E S LT D
9
CASH FLOW INFORMATION
(a) RECONCILIATION OF PROFIT/(LOSS) AFTER INCOME TAX TO NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES
YEAR ENDED
Profit/(loss) after tax
Depreciation and amortisation
Non-cash finance charges
Share-based payments
Net loss on disposal of non-current assets
Net loss on sale of available-for-sale financial assets
Exploration costs provided for or written off
Change in operating assets and liabilities:
(Increase) / decrease in trade and other receivables
(Increase) / decrease in inventories
(Decrease)/Increase in trade and other payables
Increase/(decrease) in deferred tax balances
Increase in provisions
Net cash inflow from operating activities
30 JUNE
2016
$'000
4,695
30,189
188
3,219
13
-
116
(130)
(889)
(2,253)
1,968
370
37,486
30 JUNE
2015
$'000
(4,086)
26,729
212
272
33
948
1,071
2,384
3,885
537
(4,051)
673
28,607
A N N U A L R E P O R T 2 0 1 6
71
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P
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H
A
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H
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D
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N
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M
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P
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G
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N
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NOTE S TO THE CO NSO LI DATED FINANCIAL STATEMENTS C O N T I N U E D
RISK
This section of the notes discusses the Group’s exposure to various risks and shows how these could affect the Group’s financial
position and performance.
10
11
12
Critical accounting estimates and judgements
Financial risk management
Capital risk management
72
73
74
10 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management
also needs to exercise judgement in applying the Group’s accounting policies.
(a) CARRYING VALUE OF NON-CURRENT ASSETS
Non-current assets include capitalised exploration and evaluation expenditures and mine properties. The Group has capitalised significant exploration
and evaluation expenditure on the basis either that such expenditure is expected to be recouped through future successful development (or alternatively
sale) of the areas of interest concerned or on the basis that it is not yet possible to assess whether it will be recouped and activities are planned to
enable that determination.
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides
to exploit the related lease itself, or, if not, whether it successfully recovers the related exploration asset through sale. The future recoverability of mine
properties is dependent on the generation of sufficient future cash flows from operations (or alternately sale). Factors that could impact the future
recoverability of exploration and evaluation and mine properties include the level of reserves and resources, future technological changes, costs of
drilling and production, production rates, future legal changes (including changes to environmental restoration obligations) and changes to commodity
prices and exchange rates.
Estimates of recoverable quantities of resources and reserves also include assumptions requiring significant judgment as detailed in the resource and
reserve statements.
(b)
IMPAIRMENT OF CAPITALISED EXPLORATION AND EVALUATION EXPENDITURE AND MINE PROPERTIES
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides
to exploit the related lease itself, or, if not, whether it successfully recovers the related exploration asset through sale.
Factors that could impact the future recoverability of exploration and evaluation and mine properties include the level of reserves and resources, future
technological change, costs of drilling and production, production rates, future legal changes (including changes to environmental restoration
obligations) and changes to commodity prices.
The Group has not recorded an impairment charge against exploration and evaluation expenditure in the current year (2015: nil).
(c) REHABILITATION AND MINE CLOSURE PROVISIONS
These provisions represent the discounted value of the present obligation to restore, dismantle and rehabilitate certain items of property, plant and
equipment and to rehabilitate exploration and mining leases. The discounted value reflects a combination of management's assessment of the nature and
extent of the work required, the future cost of performing the work required, the timing of cash flows and the discount rate. Changes to one or more of
these assumptions is likely to result in a change to the carrying value of the provision and the related asset or a change to profit and loss in accordance
with the Group's accounting policy stated in note 7(d)(ii).
(d) NET REALISABLE VALUE AND CLASSIFICATION OF INVENTORY
The Group's assessment of the net realisable value and classification of its inventory requires the use of estimates, including the estimation of the
relevant future commodity or product price, future processing costs and the likely timing of sale.
72
A L K A N E R E S O U R C E S LT D
10 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
(e)
INCOME TAXES
The Group is subject to income taxes in Australia. Significant judgement is required in determining the provision for income taxes. There are certain
transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group
estimates its tax liabilities based on the Group's understanding of the tax law. Where the final tax outcome of these matters is different from the amounts
that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such
determination is made.
In addition, the Group has recognised deferred tax assets relating to carried forward tax losses to the extent there are sufficient taxable temporary
differences (deferred tax liabilities) relating to the same taxation authority and the same subsidiary against which the unused tax losses can be utilised.
Utilisation of the tax losses also depends on the ability of the entity to satisfy certain tests at the time the losses are recouped. Refer to note 5(f) and 5(c)
for the current recognition of tax losses.
(f)
SHARE BASED PAYMENTS
The Group measures the cost of equity settled transactions with employees by reference to the fair value of the equity instruments at the date at which
they are granted. The fair value for share appreciation rights is determined with the assistance of an external valuer. The number of performance rights
issued under the long term incentive plan are adjusted to reflect management’s assessment of the probability of meeting the targets and service
condition. The related assumptions are set out in note 18. The accounting estimates and assumptions relating to equity settled share based payments
would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity.
11 FINANCIAL RISK MANAGEMENT
The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, equity price risk, commodity price risk and
interest risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments such as gold forward
contracts to mitigate certain risk exposures.
This note presents information about the Group's exposure to each of the above risks, their objectives, policies and processes for measuring and
managing risk, and the management of capital.
The Board of Directors' has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and
manages the financial risks relating to the operations of the Group through regular reviews of the risks and mitigating strategies.
(a) MARKET RISK
Market risk is the risk that changes in market prices, such as foreign exchange rates, equity prices, commodity prices and interest rates will affect the
Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return.
(i)
Foreign exchange risk
The Group's sales revenue for gold is denominated in US dollars and the majority of operating costs are denominated in Australian dollars, hence
the Group's cash flow is significantly exposed to movement in the A$:US$ exchange rate. The Group mitigates this risk through the use of derivative
instruments, including but not limited to Australian dollar denominated gold forward contracts.
These Australian dollar denominated gold forward contracts are entered into and continue to be held for the purpose of physical delivery of gold
bullion. As a result, the contracts are not recorded in the financial statements. Refer to note 13(a) for further information.
(ii) Commodity price risk
The Group's sales revenues are generated from the sale of gold. Accordingly, the Group's revenues are exposed to commodity price fluctuations,
primarily gold. The Group mitigates this risk through the use of derivative instruments, including but not limited to Australian dollar denominated
gold forward contracts.
(iii) Interest rate risk
The Group's main interest rate risk arises through its cash and cash equivalents and other financial assets held within financial institutions. The
Group minimises this risk by utilising fixed rate instruments where appropriate.
A N N U A L R E P O R T 2 0 1 6
73
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O
M
P
A
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Y
I
N
F
O
R
M
A
T
I
O
N
G
R
O
U
P
O
V
E
R
V
I
E
W
I
B
U
S
N
E
S
S
R
E
V
I
E
W
I
F
I
N
A
N
C
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
N
F
O
R
M
A
T
I
O
N
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
T
E
N
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M
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D
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NOTE S TO THE CO NSO LI DATED FINANCIAL STATEMENTS C O N T I N U E D
30 JUNE 2016
11 FINANCIAL RISK MANAGEMENT (continued)
(a) MARKET RISK (continued)
Summarised market risk sensitivity analysis
INTEREST RATE RISK
IMPACT ON PROFIT AFTER TAX
30 JUNE 2016
30 JUNE 2015
CARRYING
AMOUNT
$'000
24,455
273
7,197
(8,745)
+100BP
$'000
-100BP
$'000
171
-
50
-
221
(171)
-
(50)
-
(221)
CARRYING
AMOUNT
$'000
14,849
353
7,586
(9,725)
+100BP
$'000
-100BP
$'000
104
-
53
-
157
(104)
-
(53)
-
(157)
Financial assets
Cash and cash equivalents
Receivables*
Other financial assets
Financial liabilities
Trade and other payables
Total increase / (decrease)
*
The receivables balance excludes prepayments and tax balances which do not meet the definition of financial assets or liabilities.
There is no exposure to foreign exchange risk or commodity price risk for the above financial assets and liabilities.
(b) CREDIT RISK
Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposure to customers, including
outstanding receivables and committed transactions.
(i)
Risk management
The Group limits its exposure to credit risk in relation to cash and cash equivalents and other financial assets by only utilising banks and financial
institutions with acceptable credit ratings.
(ii) Credit quality
Tax receivables and prepayments do not meet the definition of financial assets. None of the Group's receivables were past due or impaired at
balance date.
(c) LIQUIDITY RISK
Liquidity risk is the risk that the Group will not be able to meet its financial liabilities as they fall due. The Group's approach to managing liquidity risk is
to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group's reputation. The Board of Directors' monitors liquidity levels on an ongoing basis.
The Group's financial liabilities generally mature within 3 months, therefore the carrying amount equals the cash flow required to settle the liability.
12 CAPITAL RISK MANAGEMENT
The Group's objectives when managing capital are to safeguard the ability to continue as a going concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust
the capital structure, the Group may return capital to shareholders, pay dividends to shareholders, issue new shares or sell assets.
74
A L K A N E R E S O U R C E S LT D
UNRECOGNISED ITEMS
This section of the notes provides information about items that are not recognised in the financial statements as they do not (yet)
satisfy the recognition criteria
13
14
15
Contingent liabilities and contingent assets
Commitments
Events occurring after the reporting period
75
75
76
13 CONTINGENT LIABILITIES AND CONTINGENT ASSETS
(a) CONTINGENT LIABILITIES
The Group has contingent liabilities estimated at up to $3,400,000 for the potential acquisition of several parcels of land surrounding the Dubbo Zirconia
Project (2015: $200,000). The landholders have the right to require subsidiary Australian Zirconia Limited to acquire their property as provided for in the
development consent conditions for the Dubbo Zirconia Project or under agreement with Australia Zirconia Limited.
The Group has entered into forward gold sales contracts which are not accounted for on the balance sheet. A contingent liability of $7,074,000 (2015:
contingent asset $1,028,000) existed at the balance date in the event that the contracts are not settled by the physical delivery of gold.
At balance date the Group had issued gold call options for 12,000 ounces of gold at an average strike price of $1,771 per ounce expiring in equal
portions in December 2017 and March 2018. A contingent liability of $2,230,000 existed at the balance date in the event that the contracts are not
settled by the physical delivery of gold.
(b) CONTINGENT ASSETS
There were no contingent assets at 30 June 2016 (2015: $1,028,000).
14 COMMITMENTS
(a) EXPLORATION AND MINING LEASE COMMITMENTS
In order to maintain current rights of tenure to exploration and mining tenements, the Group will be required to outlay the amounts disclosed in the below
table. These costs are discretionary, however if the expenditure commitments are not met then the associated exploration and mining leases may be
relinquished.
Within one year
(b) NON-CANCELLABLE OPERATING LEASES
30 JUNE
2016
$'000
1,373
30 JUNE
2015
$'000
1,542
The Group leases various offices under operating leases. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of
the leases are renegotiated.
Within one year
Later than one year but not later than five years
A N N U A L R E P O R T 2 0 1 6
30 JUNE
2016
$'000
358
-
358
30 JUNE
2015
$'000
325
290
615
75
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NOTE S TO THE CO NSO LI DATED FINANCIAL STATEMENTS C O N T I N U E D
30 JUNE 2016
14 COMMITMENTS (continued)
(c) PHYSICAL GOLD DELIVERY COMMITMENTS
As part of its risk management policy, the Group enters into gold forward contracts to manage the gold price of a proportion of anticipated sales of gold.
During the year as part of the financing arrangement with Macquarie Bank Limited, the Group entered into two gold call option contracts totalling 12,000
ounces.
The gold forward and option contracts disclosed below did not meet the criteria of financial instruments for accounting purposes on the basis that they
met the normal purchase / sale exemption because physical gold would be delivered into the contract. Accordingly, the contracts were accounted for as
sale contracts with revenue recognised in the period in which the gold commitment was met.
30 JUNE 2016
Fixed forward contracts
Within one year
Later than one year but not later than five years
Total
Gold call options
Later than one year but not later than five years
Total
30 JUNE 2015
Fixed forward contracts
Within one year
(d) CAPITAL COMMITMENTS
GOLD FOR
PHYSICAL
DELIVERY
OUNCES
50,900
13,000
63,900
12,000
12,000
CONTRACTED
GOLD SALE
PRICE
PER OUNCE
($)
VALUE OF
COMMITTED
SALES
$'000
1,683
1,715
1,771
85,680
22,300
107,980
21,252
21,252
24,000
1,577
37,848
Capital expenditure contracted for at the end of the reporting period but not recognised as liabilities amounted to $1,435,000 (2015: $632,000).
15 EVENTS OCCURRING AFTER THE REPORTING PERIOD
Subsequent to year end the Group finalised the shortfall placement of the one for five share entitlement issue. Please refer to the significant changes in
the state of affairs for more details.
The Group entered into a $14,000,000 working capital facility with Macquarie Bank Limited comprising project loan facility, performance bond facility
and hedging facility. Facility documentation was completed in early July allowing for draw down on loan and bond facilities.
The Group entered into an exclusive marketing and sales agreement with Minchem Ltd in August. Refer to the Review of Operations report for more
details.
No other matter or circumstance has occurred subsequent to period end that has significantly affected, or may significantly affect, the operations of the
Group, the results of those operations or the state of affairs of the Group in subsequent financial years.
76
A L K A N E R E S O U R C E S LT D
OTHER INFORMATION
This section of the notes includes other information that must be disclosed to comply with the accounting standards and other
pronouncements, but that is not immediately related to individual line items in the financial statements.
16
17
18
19
20
21
22
23
Interests in other entities
Related party transactions
Share-based payments
Remuneration of auditors
Earnings per share
Assets pledged as security
Parent entity financial information
Summary of significant accounting policies
77
77
78
80
80
80
81
82
16 INTERESTS IN OTHER ENTITIES
The Group’s subsidiaries at 30 June 2016 are set out below. Unless otherwise stated, they have share capital consisting solely of ordinary shares that are
held directly by the Group, and the proportion of ownership interests held equals the voting rights held by the Group. The country of incorporation or
registration is also their principal place of business.
NAME OF ENTITY
STATE / COUNTRY OF INCORPORATION
Australian Zirconia Holdings Pty Ltd
Australian Zirconia Limited
Tomingley Holdings Pty Ltd
Tomingley Gold Operations Pty Ltd
Toongi Pastoral Company Pty Ltd
Western Australia
Western Australia
New South Wales
New South Wales
New South Wales
OWNERSHIP INTEREST
HELD BY THE GROUP
2016
%
100
100
100
100
100
2015
%
100
100
100
100
-
The Group established Toongi Pastoral Company Pty Ltd on 10 March 2016 to manage the residual land acquired for the Dubbo Zirconia Project.
17 RELATED PARTY TRANSACTIONS
(a) PARENT ENTITIES
The Parent Entity within the Group is Alkane Resources Ltd.
(b) SUBSIDIARIES
Interests in subsidiaries are set out in note 16.
A N N U A L R E P O R T 2 0 1 6
77
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NOTE S TO THE CO NSO LI DATED FINANCIAL STATEMENTS C O N T I N U E D
30 JUNE 2016
17 RELATED PARTY TRANSACTIONS (continued)
(c) KEY MANAGEMENT PERSONNEL COMPENSATION
Short-term employee benefits
Post-employment benefits
Share-based payments
YEAR ENDED
30 JUNE
2016
$
1,716,852
128,355
455,030
2,300,237
30 JUNE
2015
$
1,701,339
128,354
193,822
2,023,515
Disclosures relating to Key Management Personnel are set out in the remuneration report.
Ms K E Brown is associated with Mineral Administration Services Pty Ltd, a Company which provides corporate administration, accounting and Company
Secretarial Services to the Group. This fee is disclosed as short term employee benefits in the remuneration report.
Detailed remuneration disclosures are provided in the remuneration report.
(d) TRANSACTIONS WITH OTHER RELATED PARTIES
The following transactions occurred with related parties:
Nuclear IT, a Director related entity, provides information technology consulting services to the Group which includes the coordination of the purchase of
information technology hardware and software for the current year of $89,000 (2015: $88,000) . The terms are documented in a Service Level Agreement
and represent normal commercial terms and conditions.
During the period fees amounting to $302,229 (2015: $316,925) were paid to Mineral Administration Services (MAS) in which the company secretary of
the Group, Ms K E Brown has a substantial financial interest. MAS provides administration, accounting and company secretarial services to the Group.
(e) RELATED PARTY PAYABLES
There were $29,643 worth of invoices outstanding at the end of the reporting period in relation to transactions with related parties (2015: $69,800).
18 SHARE-BASED PAYMENTS
Share-based compensation benefits are provided to employees via the Group's incentive plans. The incentive plans consist of the short term and long
term incentive plans for Executive Directors and other Executives and the employee share scheme for all other employees. Information relating to these
plans is set out in the remuneration report and below.
The fair value of rights granted under the short term and long term incentive plans is recognised as an employee benefits expense with a corresponding
increase in equity. The total amount to be expensed is determined by reference to the fair value of the rights granted, which includes any market
performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting
conditions.
Non-market vesting conditions and the impact of service conditions are included in assumptions about the number of rights that are expected to vest.
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the
end of each period, the entity revises its estimates of the number of rights that are expected to vest based on the non-market vesting and service
conditions. It recognises the impact of the revision to original estimates, if any, in statement of comprehensive income, with a corresponding adjustment
to equity.
The initial estimate of fair value for market based and non-vesting conditions is not subsequently adjusted for differences between the number of rights
granted and number of rights that vest.
When the rights are exercised, the appropriate amount of shares are transferred to the employee. The proceeds received net of any directly attributable
transaction costs are credited directly to equity.
Under the employee share scheme, shares issued by the Group to employees for no cash consideration vest immediately on grant date. On this date, the
market value of the shares issued is recognised as an employee benefits expense with a corresponding increase in equity.
The fair value of deferred shares granted to employees for nil consideration under the employee share scheme is recognised as an expense over the
relevant service period, being the year to which the incentive relates and the vesting period of the shares. The fair value is measured at the grant date of
the shares and is recognised in equity in the share-based payment reserve. The number of shares expected to vest is estimated based on the non-market
vesting conditions. The estimates are revised at the end of each reporting period and adjustments are recognised in profit or loss and the share-based
payment reserve.
78
A L K A N E R E S O U R C E S LT D
18 SHARE-BASED PAYMENTS (continued)
Executive Directors and other Executives
The Company’s remuneration framework is set out in the remuneration report, including all details of the performance rights and share appreciation
rights plans, the associated performance hurdles and vesting criteria.
Participation in the plans is at the discretion of the Board of Directors and no individual has a contractual right to participate in the plans or to receive
any guaranteed benefits. Participation is current restricted to senior Executives within the Group.
The following tables illustrate the number and weighted average fair value of, and movements in, share rights during the year.
PERFORMANCE RIGHTS
Outstanding at the beginning of the year
Issued during the year
Vested during the year
Lapsed during the year
Outstanding at the end of the year
2016
WEIGHTED
NUMBER OF
AVERAGE FAIR
SHARE
RIGHTS
VALUE
$
NUMBER OF
SHARE RIGHTS
2015
WEIGHTED
AVERAGE FAIR
VALUE
$
3,907,405
4,945,307
(1,232,047)
(445,417)
7,204,278
0.21
0.25
0.25
0.25
0.23
-
5,861,105
-
(1,953,700)
3,907,405
-
0.21
-
0.21
0.21
The determination of the number of rights that are to vest or be forfeited is made by the Remuneration Committee after the statutory audit has been
substantially completed. As such, the actual determination was made after the balance date however details have been included in the table above as the
relevant performance period is the current financial year.
The fair value of each performance right at the time of the valuation performed for Remuneration Committee approval when the number of rights to be
granted was determined, being the VWAP for June 2015, was $0.32 (2015: $0.27 VWAP for June 2014).
SHARE APPRECIATION RIGHTS
Opening balance
Issued during the year
Outstanding at the end of the year
2016
WEIGHTED
2015
WEIGHTED
NUMBER OF
AVERAGE FAIR
NUMBER OF
AVERAGE FAIR
SHARE
RIGHTS
10,550,000
13,187,499
23,737,499
VALUE
$
0.07
0.09
0.08
SHARE
RIGHTS
VALUE
$
-
10,550,000
10,550,000
-
0.07
0.07
The fair value of each share appreciation right at the time of the valuation performed for Remuneration Committee approval when the number of rights to
be granted was determined, being as at 7 August 2015, was $0.08 (2015: $0.10 as at 14 August 2014).
The Performance Rights, which have non-market based hurdle conditions, have been valued using the Black-Scholes-Merton model to estimate the fair
value at valuation date.
The Share Appreciation Rights, which have market based hurdle conditions, have been valued using a Monte Carlo simulation based model to test the
likelihood of attaining the Total Shareholder Return hurdle. The Monte Carlo model incorporates the impact of this market based condition on the fair
value of the rights.
The following table lists the inputs to the models used.
GRANT DATE
5/12/2014
18/11/2015
PERFORMANCE
HURDLE
DIVIDEND
YIELD
TSR and Non-Market
TSR and Non-Market
%
-
-
EXPECTED
STOCK
VOLATILITY
%
65
70
RISK FREE
RATE
%
2.60
2.25
EXPECTED
LIFE YEARS
2.57
2.62
A N N U A L R E P O R T 2 0 1 6
WEIGHTED
AVERAGE
SHARE PRICE
AT GRANT
DATE
$
0.07
0.09
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NOTE S TO THE CO NSO LI DATED FINANCIAL STATEMENTS C O N T I N U E D
30 JUNE 2016
18 SHARE-BASED PAYMENTS (continued)
Executive Directors and other Executives (continued)
EXPENSES ARISING FROM SHARE BASED PAYMENTS TRANSACTIONS
Employee share scheme
Share appreciation rights
19 REMUNERATION OF AUDITORS
YEAR ENDED
30 JUNE
2016
$
2,576,338
641,792
3,218,130
30 JUNE
2015
$
-
272,000
272,000
During the year the following fees were paid or payable for services provided by the auditor of the Parent Entity, its related practices and non-related
audit firms:
PricewaterhouseCoopers
(i)
Audit and other assurance services
Audit of annual financial statements
Review of half year financial statements
Other assurance services
Total remuneration for audit and other assurance services
(ii) Other services
Other services
Total remuneration for other services
20 EARNINGS PER SHARE
(a) WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR
Weighted average number of ordinary shares used in denominator
in calculating basic profit/(loss) per share
Weighted average number of ordinary shares used as the
denominator in calculating diluted profit/(loss) per share
21 ASSETS PLEDGED AS SECURITY
YEAR ENDED
30 JUNE
2016
$
115,600
35,950
42,875
194,425
3,500
3,500
30 JUNE
2015
$
98,900
34,900
17,920
151,720
-
-
YEAR ENDED
2016
NUMBER
2015
NUMBER
420,783,944
413,539,195
424,809,827
416,215,672
As at the date of this report $7,197,000 (2015: $7,586,000) in deposits has been provided as security. Refer to note 6(d) for details.
As mentioned in the Directors Report, in early July 2016 subsidiary Tomingley Gold Operations Pty Ltd completed the establishment of a working capital
facility for $14,000,000 with Macquarie Bank Limited. The facility comprises:
(cid:1) a loan facility of $7,000,000 repayable by 30 June 2017;
(cid:1) a performance bond facility of $7,000,000 repayable by 29 September 2017; and
(cid:1) hedging facilities comprised of A$ gold forward facility and 12,000 ounces of A$ call options.
80
A L K A N E R E S O U R C E S LT D
21 ASSETS PLEDGED AS SECURITY (continued)
The hedging facility was entered into during the year ended 30 June 2016 as a condition precedent to the finalisation of the working capital facilities and
at balance date the following securities were provided:
(cid:1) a combination security agreement providing security over all of the assets of Tomingley Holdings Pty Ltd and Tomingley Gold Operations Pty Ltd;
(cid:1) a first ranking registered mining mortgage over the Tomingley Mining Lease in accordance with the Mining Act 1992 (NSW);
(cid:1) land mortgages and a water rights mortgage over the holdings of Tomingley Gold Operations Pty Ltd; and
(cid:1) a guarantee provided by Alkane Resources Ltd and Tomingley Holdings Pty Ltd.
As a result of securing the Macquarie Bank facilities, the Group repaid in full the $4,000,000 working capital facility noted in the half year financial
report.
Cash and cash equivalents
Receivables
Inventories
Total current assets pledged as security
Non-current
Plant and equipment
Total non-current assets pledged as security
Total assets pledged as security
22 PARENT ENTITY FINANCIAL INFORMATION
(a) SUMMARY FINANCIAL INFORMATION
The individual financial statements for the Parent Entity show the following aggregate amounts:
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Shareholders' equity
Issued capital
Reserves
Accumulated losses
Total equity
Statement of Comprehensive Income
Profit/(loss) for the period after income tax
Other comprehensive loss
Total comprehensive income/(loss)
30 JUNE
2016
$'000
14,571
972
12,394
27,937
75,939
75,939
103,876
30 JUNE
2016
$'000
10,086
181,213
191,299
(807)
(181)
(988)
213,791
1,582
(25,062)
190,311
7,092
(1,119)
5,973
30 JUNE
2015
$'000
-
-
-
-
-
-
-
30 JUNE
2015
$'000
6,963
164,383
171,346
(1,065)
(128)
(1,193)
201,845
463
(32,155)
170,153
(858)
(463)
(1,321)
The parent entity provided a guarantee in respect of the working capital facilities entered into by subsidiary Tomingley Gold Operations Pty Ltd. Refer to
note 21 for details.
A N N U A L R E P O R T 2 0 1 6
81
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NOTE S TO THE CO NSO LI DATED FINANCIAL STATEMENTS C O N T I N U E D
30 JUNE 2016
22 PARENT ENTITY FINANCIAL INFORMATION (continued)
(b) DETERMINING THE PARENT ENTITY FINANCIAL INFORMATION
The financial information for the parent entity has been prepared on the same basis as the consolidated financial statements, except as set out below.
(i) Tax consolidation legislation
Alkane Resources Ltd and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. Refer to note 5 for
further detail.
(ii) Share-based payments rights
The grant by the company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital
contribution to that subsidiary undertaking. The fair value of employee services received, measured by reference to the grant date fair value, is
recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.
23 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of all significant accounting policies adopted in the preparation of the consolidated financial statements that have not been
disclosed previously. The policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the
Group consisting of Alkane Resources Ltd and its subsidiaries. Comparatives presented are for the 12 month period to 30 June 2015.
(a) BASIS OF PREPARATION
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board and the Corporations Act 2001. Alkane Resources Ltd is considered a for-profit entity for the purpose of preparing
the financial statements.
(i)
Compliance with IFRS
The consolidated financial statements of the Group also comply with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
(ii) Historical cost convention
The financial statements have been prepared under the historical cost basis, except for certain financial assets and liabilities which are measured at
fair value.
(b) PRINCIPLES OF CONSOLIDATION
(i)
Subsidiaries
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control
ceases.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive income,
statement of comprehensive income, statement of changes in equity and balance sheet respectively.
(c) FOREIGN CURRENCY TRANSLATION
(i)
Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in
which the entity operates (the functional currency). The consolidated financial statements are presented in Australian dollars, which is Alkane
Resources Ltd's functional and presentation currency.
82
A L K A N E R E S O U R C E S LT D
23 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) FOREIGN CURRENCY TRANSLATION (continued)
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in statement of comprehensive income.
All other foreign exchange gains and losses are presented in the consolidated statement of comprehensive income on a net basis within other
income or other expenses.
(d)
INVESTMENTS AND OTHER FINANCIAL ASSETS
(i)
Impairment
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is
impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of
impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events)
has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
The Group has assessed there is no requirement to impair for the current year.
(e) EARNINGS PER SHARE
(i)
Basic earnings per share
Basic earnings per share is calculated by dividing:
(cid:1) the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares; and
(cid:1) by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares
issued during the year and excluding treasury shares.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
(cid:1) the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and
(cid:1) the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential
ordinary shares.
(f) GOODS AND SERVICES TAX (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation
authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the
taxation authority is included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from,
or payable to the taxation authority, are presented as operating cash flows.
(g) ROUNDING OF AMOUNTS
The Company has relied on the relief provided by the 'ASIC Corporations (Rounding in Financial/Directors' Report) Instrument 2016/191', relating to the
'rounding off' of amounts in the financial statements. Amounts in the financial statements have been rounded off to the nearest thousand dollars, or in
certain cases, the nearest dollar.
(h) PARENT ENTITY FINANCIAL INFORMATION
The financial information for the Parent Entity, Alkane Resources Ltd, disclosed in note 22 has been prepared on the same basis as the consolidated
financial statements, except as set out below.
A N N U A L R E P O R T 2 0 1 6
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NOTE S TO THE CO NSO LI DATED FINANCIAL STATEMENTS C O N T I N U E D
30 JUNE 2016
23 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(h) PARENT ENTITY FINANCIAL INFORMATION (continued)
(i)
Tax consolidation legislation
Alkane Resources Ltd and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation.
The head entity, Alkane Resources Ltd, and the controlled entities in the Tax Consolidated Group account for their own current and deferred tax
amounts. These tax amounts are measured as if each entity in the Tax Consolidated Group continues to be a stand alone taxpayer in its own right.
In addition to its own current and deferred tax amounts, Alkane Resources Ltd also recognises the current tax liabilities (or assets) and the deferred
tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the Tax Consolidated Group.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate Alkane Resources Ltd for any
current tax payable assumed and are compensated by Alkane Resources Ltd for any current tax receivable and deferred tax assets relating to unused
tax losses or unused tax credits that are transferred to Alkane Resources Ltd under the tax consolidation legislation. The funding amounts are
determined by reference to the amounts recognised in the wholly-owned entities financial statements.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts receivable from or
payable to other entities in the Group.
(i) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2016 reporting periods and have not
been early adopted by the Group. The Group's assessment of the impact of these new standards and interpretations is set out below.
TITLE OF STANDARD
NATURE OF CHANGE
IMPACT
AASB 9
Financial
Instruments
AASB 9
addresses the classification,
measurement and derecognition of
financial assets and financial
liabilities and introduces new
rules for hedge accounting and new
impairment model for financial
assets.
The Group does not expect any impact
from the new classification, measurement and
derecognition rules on the Group’s financial
assets and financial liabilities. There will also
be no impact on the Group’s accounting for
financial liabilities, as the new requirements
only affect the accounting for financial
liabilities that are designated at fair value
through profit or loss and the Group does
not have any such liabilities. The new hedging
rules align hedge accounting more closely
with the Group’s risk management practices.
As a general rule it will be easier to apply
hedge accounting going forward as the
standard introduces a more principles-based
approach. The new standard also introduces
expanded disclosure requirements and
changes in presentation.
MANDATORY APPLICATION DATE/
DATE OF ADOPTION BY GROUP
Must be applied for financial
years commencing on or after
1 January 2018. Based on the
transitional provisions in the
completed AASB 9, early
adoption in phases was only
permitted for annual reporting
periods beginning before
1 February 2015. After that date,
the new rules must be adopted in
their entirety.
84
A L K A N E R E S O U R C E S LT D
23 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(h) PARENT ENTITY FINANCIAL INFORMATION (continued)
(i) New accounting standards and interpretations (continued)
TITLE OF STANDARD
NATURE OF CHANGE
IMPACT
At this stage, the Group does not foresee any
material impact given revenue is
predominantly gold sales.
MANDATORY APPLICATION DATE/
DATE OF ADOPTION BY GROUP
Mandatory for financial years
commencing on or after
1 January 2018. Expected date
of adoption by the Group:
1 July 2018.
AASB 15
Revenue from
Contracts with
Customers
AASB 16
Leases
The AASB has issued a new standard
for the recognition of revenue. This
will replace AASB 118 which covers
contracts for goods and services and
AASB 111 which covers construction
contracts. The new standard is based
on the principle that revenue is
recognised when control of a good
or service transfers to a customer -
so the notion of control replaces the
existing notion of risks and rewards.
The standard permits a modified
retrospective approach for the
adoption. Under this approach
entities will recognise transitional
adjustments in retained earnings on
the date of initial application (eg 1
July 2018), ie without restating the
comparative period.
They will only need to apply the new
rules to contracts that are not
completed as of the date of initial
application.
The AASB requires a lessee to
recognise assets and liabilities for all
leases with a term of more than 12
months, unless the underlying asset
is of low value.
At this stage, the Group does not foresee any
material impact given the term and values of
current leases.
Mandatory for financial years
commencing on her after
1 January 2019.
There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future
reporting periods and on foreseeable future transactions.
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DIRECTOR S' DECLARATI O N
30 JUNE 2016
In the Directors' opinion:
(a)
the financial statements and notes set out on pages 25 to 69 are in accordance with the Corporations Act 2001, including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and
(ii)
giving a true and fair view of the consolidated entity's financial position as at 30 June 2016 and of its performance for the year ended on that date,
and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
Note 23(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting
Standards Board.
The Directors' have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act
2001.
This declaration is made in accordance with a resolution of Directors.
D I Chalmers
Director
Perth
26 August 2016
86
A L K A N E R E S O U R C E S LT D
INDEPENDENT AUDI TO R'S REPORT TO THE MEMBERS
A N N U A L R E P O R T 2 0 1 6
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IND E PE N DENT AUDI TO R'S REPORT TO THE MEMBERS C O N T I N U E D
88
A L K A N E R E S O U R C E S LT D
S H A R E H O L D E R I N F O R M A T I O N
SHARE HOLDING AT 20 SEPTEMBER 2016 – ALK
(a) DISTRIBUTION OF SHAREHOLDERS
SHARE HOLDING
1,000
1 -
1,001 -
5,000
5,001 - 10,000
10,001 - 100,000
over
100,001 -
(b) UNMARKETABLE PARCELS
There are 947 shareholders who hold less than a marketable parcel.
(c) VOTING RIGHTS
Voting rights are one vote per fully paid ordinary share
NUMBER OF HOLDERS OF
FULLY PAID ORDINARY SHARES
765
1,980
1,159
2,111
446
6,461
(d) NAMES OF THE SUBSTANTIAL HOLDERS AS DISCLOSED IN SUBSTANTIAL HOLDING NOTICES:
SHAREHOLDER
Abbotsleigh Pty Ltd
FIL Limited
NUMBER OF SHARES
109,869,451
41,263,900
TOP TWENTY SHAREHOLDERS AT 20 SEPTEMBER 2016
SHAREHOLDER
Abbotsleigh Pty Ltd
JP Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
HSBC Custody Nominees (Australia) Limited – A/C 2
National Nominees Limited
Choice Investments Dubbo Pty Ltd
Sandhurst Trustees Ltd
Washington H Soul Pattinson
Funding Securities Pty Ltd
Bac Kao Investment Pty Ltd
Leefab Pty Ltd
ABN Amro Clearing Sydney Nominees Pty Ltd
Mandel Pty Ltd
Mr Richard Mitchell Dimond & Mrs Denise Rosslyn Dimond
Ms Jillanne Homewood
Mr David Hanbury Edmonds
Ms Kathryn Jane Swan
S Maas Holdings Pty Ltd
Berne No 132 Nominees Pty Ltd <152417 A/C>
NUMBER
OF SHARES
102,669,451
64,367,220
28,949,825
13,213,248
13,163,307
6,797,258
6,724,695
6,158,909
5,500,000
3,700,000
2,792,888
2,752,456
2,653,331
2,500,000
2,400,000
2,350,421
2,336,536
2,000,000
1,968,227
1,848,000
274,845,772
% ISSUED
CAPITAL
20.66
12.95
5.83
2.66
2.65
1.37
1.35
1.24
1.11
0.74
0.56
0.55
0.53
0.50
0.48
0.47
0.47
0.40
0.40
0.37
55.29
A N N U A L R E P O R T 2 0 1 6
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S H A R E H O L D E R I N F O R M A T I O N C O N T I N U E D
RESTRICTED SECURITIES
As at the date of this report, there were no securities subject to restriction under the Listing Rules of ASX Limited.
ON MARKET BUY-BACK
As at the date of this report, there was no current on market buy-back
90
A L K A N E R E S O U R C E S LT D
C O R P O R A T E G O V E R N A N C E
CORPORATE GOVERNANCE STATEMENT
The Company’s annual Corporate Governance Statement has been published and released to ASX separately.
It is available on the Company’s website at http://www.alkane.com.au/index.php/corporate/corporate-governance
A N N U A L R E P O R T 2 0 1 6
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T E N E M E N T S C H E D U L E
AT 20 SEPTEMBER 2016
TENEMENT NUMBER
PROJECT NAME/LOCALITY
ALKANE INTEREST %
OTHER INTERESTS
GL 5884 (Act 1904)
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Dubbo, NSW
Dubbo, NSW
Geurie, NSW
Wellington, NSW
Tomingley, NSW
Tomingley, NSW
Tomingley, NSW
Tomingley, NSW
Tomingley, NSW
Cudal, NSW
Cudal, NSW
Bodangora, NSW
Kaiser/Bodangora, NSW
Finns Crossing near Bodangora, NSW
Rockley, NSW
Rockley, NSW
Elsienora near Crooked Corner, NSW
Elsienora near Crooked Corner, NSW
Orange East, NSW
Nullagine, WA
Nullagine, WA
Nullagine, WA
Miranda Well, WA
McDonough, WA
McDonough, WA
ML 6036
ML 6042
ML 6277
ML 6310
ML 6389
ML 6406
ML 1351
ML 1364
ML 1479
EL 6319
EL 5548
ML 1724
EL 7631
EL 6320
EL 5675
EL 5830
EL 5942
EL 6085
ML 1684
EL 7020
EL 8340
EL 4022
EL 6209
EL 8261
EL 8170
EL 8194
EL 6082
EL 6767
EL 8442
E 46/522-I
E 46/523-I
E 46/524
M 36/303
M 36/329
M 36/330
92
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
80
0
0
0
0
19.4
19.4
19.4
Subject to 2% net smelter return – Ajax Joinery Pty Ltd
20% Balamara Resources Limited
Alkane earning up to 80% from Clancy Exploration Limited
who hold 100% beneficial interest in the tenement
100% BC Iron Limited
Alkane group retains 60% interest in diamond potential
Cosmos Joint Venture
Alkane group diluting 80.6% Australian Nickel Investments Pty Ltd
A L K A N E R E S O U R C E S LT D
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A N N U A L R E P O R T 2 0 1 6
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A L K A N E R E S O U R C E S LT D